Simple Interest Calculator
Calculate interest earned on principal without compounding. Perfect for short-term loans and bonds.
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Results
Final Balance
$ 0Principal
$ 0Interest Earned
$ 0Portfolio Breakdown
Growth Chart
Visualize your interest growth over time
Results are for informational purposes only and do not constitute financial advice. Actual returns may vary due to market conditions, taxes, and fees. Read our full disclaimer.
What is Simple Interest?
Simple interest is calculated only on the original principal — it does not compound. The formula is A = P × r × t, where P is principal, r is the annual rate, and t is time in years. Unlike compound interest, the interest earned each period never gets added to the base for future calculations.
Simple Interest vs Compound Interest
On a $10,000 investment at 5% for 10 years: simple interest returns exactly $5,000 in interest — $500 every year, no variation. Compound interest (annual) returns $6,288 over the same period. The gap widens dramatically over longer timeframes. At 30 years, simple interest produces $15,000 in interest while compound interest produces $33,219. This difference is why long-term investors prioritize compounding accounts over simple interest products.
When is Simple Interest Used?
Simple interest is most common in short-term loans, auto financing, and some types of bonds. Many personal loans and consumer finance products use simple interest, which actually benefits borrowers compared to compound interest loans — because interest is only charged on the original balance, not on accumulated interest. Understanding whether a loan uses simple or compound interest can save you thousands of dollars over the life of the loan.