When simple interest applies
Simple interest appears in short-term loans, some auto financing, bonds paying coupons and textbook problems. Because it never earns interest on interest, balances grow linearly instead of exponentially.
Simple Interest Calculator
Interest that never compounds: principal × rate × time, calculated instantly.
Enter your details and press Calculate to see results.
Formula
I = P × r × t · Total = P + I
Example
$5,000 at 5% for 3 years earns 5000 × 0.05 × 3 = $750 interest; total $5,750.
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Frequently asked questions
Is simple interest better than compound?
For borrowers usually yes (cheaper); for savers no (slower growth). Compare directly with the compound interest calculator.
How do I handle months instead of years?
Enter time as a decimal — 18 months is 1.5 years.
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