Simple interest
calculator
The oldest interest formula there is: principal times rate times time, no compounding. Used for many personal loans, bonds and short-term lending — and the baseline for understanding everything else.
Interest without compounding
Simple interest is charged only on the original principal — never on accumulated interest. That makes it linear: double the time, double the interest.
Compounded yearly instead: $11,576 — $76 more.
Where it's actually used
Many auto loans and personal loans accrue simple interest daily on the remaining balance, most bonds pay simple coupons, and short-term lending is quoted this way. The gap versus compounding is small over short periods and enormous over long ones — which is the entire story of the compound interest calculator.
Watch the time units
Rate and time must match: an annual rate with time in years, or convert — 8 months is t = 8÷12. Mixing units is the classic mistake.
Simple interest FAQ
Interest = principal × rate × time, with the rate as a decimal and time in matching units. $10,000 at 5% for 3 years earns $1,500.
Simple interest is charged only on the principal; compound interest is also charged on previously accrued interest. They match in year one and diverge more every year after.
Common in auto and personal loans (accrued daily on the balance), bond coupons, and short-term lending. Savings accounts and credit cards almost always compound instead.
Convert to years: 8 months is 8 ÷ 12 ≈ 0.667 years. The rate and time must always be in the same units.