💰 Simple Interest Calculator

What Is Simple Interest?

Simple Interest (SI) is interest calculated only on the original principal amount, not on previously accumulated interest. It is the most straightforward form of interest calculation and is used in short-term loans, some bank accounts, and government savings schemes.

Simple Interest Formula

Simple Interest vs Compound Interest

The key difference is that compound interest calculates interest on the accumulated interest from previous periods, leading to exponential growth. Simple interest is linear — it grows at the same rate every year.

• For the same rate and period, compound interest always yields more than simple interest (for savings).
• Simple interest is more common in short-term loans and some government schemes.
• Car loans in the US use simple interest, but Indian banks typically use reducing balance (a form of compound interest).

Try our Compound Interest Calculator to compare side by side.