Example: $1,000 at 5% for 5 years. Simple Interest = 1000 × 0.05 × 5 = $250. Total Amount = $1,250.
Applications
Savings AccountsBondsLoansInvestmentsCertificates
Frequently Asked Questions
What is simple interest?▼
Simple interest is calculated only on the principal amount. It does not compound - interest is earned only on the original investment, not on accumulated interest.
Simple vs compound interest?▼
Simple interest: I = P×r×t. Compound interest: A = P(1+r/n)^(nt). Compound earns interest on interest, so it grows faster over time.
How to calculate simple interest?▼
Simple Interest = Principal × Rate × Time. I = P × r × t. Total Amount = Principal + Interest.
When to use simple interest?▼
Simple interest is used for short-term loans, savings accounts, bonds, and certain types of investments. It provides predictable returns.
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