Interest Calculator
Simple interest earned or owed over time.
$
%
years
Interest
- Principal
- $10,000.00
- Ending balance
- $11,500.00
- Interest per year
- $500.00
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How this calculator works
Simple interest is calculated on the original principal only, so the same amount is added every year.
Formula
I = P × r × t
Example
$10,000 at 5% simple interest for 3 years earns $1,500.
When to use it
- Short-term loans between individuals
- Some auto and personal loans
- Checking bond coupon payments
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is paid only on the original principal. Compound interest is also paid on interest already earned, so balances grow faster over time.
Where is simple interest used?
It is common for short-term personal loans, some auto loans and certain bonds. Most savings accounts and credit cards use compound interest.
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