💲 Simple Interest Calculator

What is Simple Interest?

Simple interest is a straightforward way to calculate the interest charged or earned on a principal amount over a set period. Unlike compound interest, simple interest is calculated only on the original principal, not on accumulated interest. The formula is: I = P × R × T, where I is interest, P is principal, R is the annual interest rate, and T is time in years.

When is Simple Interest Used?

• Short-term loans: Many personal and auto loans use simple interest.
• Certificates of Deposit: Some CDs calculate interest simply.
• Bonds: Many bonds pay simple interest (coupon payments).

Simple interest is easier to calculate and understand, making it ideal for short-term financial products. For long-term investments, compound interest is more common and results in higher returns.