Simple Interest Calculator
Simple Interest (SI) is a method of calculating interest on a principal amount over a period of time at a fixed rate. It is commonly used in loans, savings accounts, and short-term investments. Unlike compound interest, simple interest does not accumulate on previously earned interest—it is calculated only on the original principal.
What is Simple Interest?
Simple interest is the extra amount paid for borrowing money or the earnings received on an investment. It is straightforward and does not compound over time, meaning the interest remains constant throughout the duration of the loan or investment.
Formula for Simple Interest:
Where:
- P = Principal amount (initial sum)
- R = Rate of interest per annum (%)
- T = Time period (in years)
Example:
Suppose you invest $10,000 in a savings scheme with an annual interest rate of 5% for 3 years. Using the formula:
So, the total interest earned after 3 years will be $1,500, making the total amount $11,500 (Principal + Interest).
To learn more about how compound interest works, check out our compound interest calculator.
Use this calculator to quickly determine your interest earnings or loan costs with ease!