Simple Interest Calculator
Simple interest is calculated only on the original principal, never on interest that's already accrued — it's common in short-term loans and some fixed deposits. This is the quickest way to work out the interest and total amount owed or earned.
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How It Works
Simple interest uses the formula SI = (P × R × T) ÷ 100, where P is principal, R is the annual rate as a percentage, and T is time in years. Unlike compound interest, the interest amount is the same every year because it's always calculated on the original principal only — nothing is reinvested.
Worked Example
$10,000 at 6% simple interest for 3 years earns exactly $1,800 — a flat $600 every single year, since the calculation always uses the original $10,000, never the growing balance. Total repayment or maturity value is $11,800. Run the same numbers through the Compound Interest Calculator instead and the total comes out slightly higher, at roughly $11,910, because compounding lets each year's interest start earning interest of its own — a small gap at 3 years that would widen considerably over a longer period.