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Investing & Savings

Simple Interest Calculator

Calculate simple interest on a principal balance without compounding.

Best for: Calculate simple interest on principal without compounding over a stated rate and term.

Your assumptions

Calculate your estimate

Your result

Simple Interest estimate

Ending balance
$11,500.00
Simple interest earned
$1,500.00
Starting principal
$10,000.00

How to use this simple interest calculator

Use this simple interest calculator when interest is based only on the original principal. It is appropriate for basic illustrations and some loan or note structures, but not for products that compound or amortize.

  1. 1

    Enter original principal

    Use the amount on which interest is calculated throughout the term.

  2. 2

    Add annual rate and time

    Enter the stated simple annual rate and duration in years.

  3. 3

    Review interest and ending balance

    Separate the interest charge from return of principal.

Worked planning example

Example: price a three-year simple-interest note

Set up

Enter the note principal, annual simple rate, and three-year term.

Compare

Compare the result with compound interest at the same nominal rate.

Takeaway

The gap grows with time because simple interest never earns interest on accumulated interest.

Confirm the product really uses simple interest

Many loans accrue daily or amortize, and deposit products usually compound, producing a different result.

  • Read the interest convention in the agreement.
  • Check whether payments reduce principal during the term.
  • Match the time unit to the stated rate.

Calculation methodology and assumptions

For this simple interest estimate, Silvia uses principal, annual interest rate, term. Calculate simple interest on a principal balance without compounding. Results are estimates, not quotes, tax advice, or investment recommendations.

Frequently asked questions

What is the simple interest formula?

Simple interest equals principal multiplied by annual rate multiplied by time.

Does simple interest compound?

No. Interest is calculated only on the original principal in this model.

Can I use this for an amortizing loan?

No. Use a loan or amortization calculator when periodic payments reduce the balance.

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