Simple Interest Calculator
A Simple Interest Calculator helps you calculate the total return on an investment where interest does not compound. Instead, interest is applied only to the original principal, making calculations straightforward and predictable.
What is Simple Interest Calculator?
This tool estimates growth using the formula Interest = Principal × Rate × Time. It’s often used for short-term loans, bonds, or simple savings plans.
How to Use the Simple Interest Calculator Tool
- Enter the principal amount.
- Enter annual interest rate.
- Enter time in years.
- Optionally, add monthly contributions or yearly withdrawals.
- Click calculate to view results, table, and chart.
Formula Behind the Calculator
The formula is:
A = P + (P × r × t)
- P = principal
- r = annual interest rate (decimal)
- t = time in years
Example Calculation of Simple Interest
For $10,000 at 5% for 10 years: Interest = 10,000 × 0.05 × 10 = $5,000. Final balance = $15,000.
Benefits of Using Simple Interest Calculator
- Quick and predictable results
- Ideal for short-term loans or deposits
- Easy comparison with compound interest
FAQs about Simple Interest Calculator
Q: Is simple interest better than compound interest?
A: It depends — simple interest is predictable, but compound grows faster long-term.
Q: Can I add contributions?
A: Yes, monthly contributions are added in this calculator.
Q: Does it support withdrawals?
A: Yes, yearly withdrawals are subtracted at the end of each year.
Q: Where is simple interest used?
A: Common in car loans, bonds, or fixed deposits with linear growth.
Conclusion
Use this Simple Interest Calculator to estimate your savings or loan costs. Try different inputs and compare with compound interest calculators for informed decisions.