Simple Interest Calculator
Calculate simple interest. Enter principal, rate, and term, and compare with compound interest.
📖 How to Use
- Enter the principal amount
- Enter the annual interest rate (%)
- Select the period unit (years/months)
- Enter the period
- View simple interest and final amount
- Compare with compound interest under the same conditions
✨ Features
- ✓Simple interest formula I = P × r × t
- ✓Period unit selection (years/months)
- ✓Real-time comparison with compound interest
- ✓Interest difference visualization
- ✓Period-by-period interest comparison table
📐 Formula
Simple Interest = Principal × Annual Rate × Period
Final Amount = Principal + Interest💡 How It Works
- •Simple interest is calculated only on the principal amount.
- •Simple interest formula: I = P × r × t (I: Interest, P: Principal, r: Rate, t: Time)
- •Compound interest is calculated on principal plus accumulated interest, but simple interest only on the principal.
- •The longer the period, the greater the difference between compound and simple interest.
- •Most fixed deposits and savings accounts use simple interest calculation.
- •Simple interest is easier to calculate and predict, but compound interest is better for long-term investments.
❓ FAQ
Q. What's the difference between simple and compound interest?
A. Simple interest is calculated only on the principal, while compound interest is calculated on principal plus accumulated interest. For longer periods, compound interest is significantly more beneficial.
Q. Which financial products use simple interest?
A. Most bank fixed deposits and regular savings accounts use simple interest. Compound interest products are available in some special offerings.
Q. What's the return on $10,000 at 5% for 3 years with simple interest?
A. Interest = $10,000 × 5% × 3 years = $1,500. Final amount = $11,500.
Q. How is the calculation done when entering months?
A. Monthly periods are converted to years by dividing by 12. For example: 18 months = 1.5 years
Q. Is simple interest ever advantageous?
A. For short-term investments (1 year or less), the difference between simple and compound interest is minimal. Simple interest has the advantage of easy calculation and prediction.