Simple Interest Calculator
Calculate simple interest using SI = P × R × T formula. Find interest, principal, rate, or time period.
Simple Interest Calculator
Calculate interest earned or paid with the simple interest formula
Understanding Simple Interest
What is Simple Interest?
Simple interest is a method of calculating interest where the interest is computed only on the original principal amount. Unlike compound interest, simple interest doesn't earn "interest on interest." The interest amount remains constant throughout the investment or loan period.
Simple Interest Formula
- SI = P × R × T
- P = Principal (initial amount)
- R = Rate of interest per year (as decimal)
- T = Time period in years
- A = P + SI (Total Amount)
Simple vs Compound Interest
- Simple: Interest on principal only
- Compound: Interest on principal + accumulated interest
- Simple grows linearly, compound grows exponentially
- Compound earns more over longer periods
- Simple is easier to calculate and understand
Common Applications
- Short-term personal loans
- Car loans and auto financing
- Some certificates of deposit (CDs)
- Treasury bills and bonds
- Consumer credit and installment loans