Simple Interest Calculator

With simple interest the principal never changes as a base. Each year you earn the same fixed slice — principal times rate — and that slice never starts earning interest of its own. The total interest is therefore a straight line over time: double the years, double the interest. This makes simple interest easy to compute in your head and common in short-term loans, some fixed deposits, and certain bonds.

The trade-off is growth. Because the interest never compounds, a simple-interest balance always trails a compound-interest balance at the same rate, and the gap widens the longer the money is invested. Switch the currency at the top to view the figures in your own.

Place a principal of 10,000 at 8% simple interest for 5 years. Each year it earns a flat 800 (8% of 10,000). Using I = 10,000 · 0.08 · 5, the total interest is 4,000, giving a maturity amount of 14,000. By contrast, the same 10,000 at 8% compounded annually would grow to about 14,693 — roughly 693 more — purely because compound interest pays interest on previously earned interest.

A 0% rate leaves the maturity amount equal to the principal. Because the interest is a flat line, simple interest can actually be the borrower-friendly option on a loan: you never pay interest on interest, so a simple-interest loan costs less than a compound one at the same rate. For investments the reverse is true — simple interest is the weaker grower. Note that some products advertise a "simple" rate but compound in practice; always confirm how interest is applied before comparing two offers.