Simple Interest Calculator

A simple interest calculation takes a sum of money (principal) and calculates regular interest on that amount, without the effect of compounding. This is in direct contrast to compound interest, where accumulated interest is added back to the principal for each calculation, so that you effectively earn interest on already accumulated interest. It is this difference that makes the simple interest calculation widely regarded as least advantageous to savers and most advantageous to borrowers.

How Does Simple Interest Calculators work?

The simple interest calculation only requires three inputs, which are the principal (or present value of the amount lent), the interest rate, and the number of time periods over which the principal is lent. Simply multiply the principal by the interest rate to get the amount of interest earned in one time period, and multiply that interest by the number of time periods over which the investment will grow in order to calculate how much interest the lender will earn in total. Generally, the time periods are years, but the periods can be days or weeks or any time period for that matter, as long as the rate is the rate given for the matching time period. The formula is shown below:

The formula for simple interest is A = P(1 + rt), where P is the initial principal, r is the interest rate and t is the time in years.

Benefits of Simple Interest Calculator

• Simple Interest Calculator shows you the simple interest on your deposit in few seconds.
• Easy comparison on simple interest rates against the compound interest rates and determine the interest you pay on any loanx

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