Frequently Asked Questions
What is simple interest?
Simple interest is calculated only on the original principal amount. Unlike compound interest, earned interest is not reinvested.
What is the simple interest formula?
Interest = Principal × Rate × Time. For example, $10,000 at 5% for 3 years yields $1,500 in interest.
Where is simple interest used?
Simple interest applies to some savings accounts, short-term loans, auto loans, and personal loans. It is less common than compound interest.
Updated 2026 — latest rates