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Simple Interest Calculator
Calculate simple interest earned or owed. Compare with compound interest to see the difference.
I = P × R × T
Interest Calculation
$1,500
Simple Interest Earned
$10,000
Principal
$11,500
Total (P + I)
$1,576
Compound Interest
$76
Compound Advantage
Simple interest: $1,500. With compound interest you'd earn $1,576 — $76 more.
Analysis & insights
On $10,000 at 5% for 0 years, simple interest earns $1,500 — total $11,500. Compare to compound interest which earns $1,576 — total $11,576. Compounding adds $76 more over the same period. Always pick compound over simple when investing; understand the difference when borrowing.
Simple interest calculation
Simple interest grows linearly. Compound interest grows exponentially. The longer the period, the bigger the gap.
Risk & benchmark gauge
Current band
Moderate
5% annual rate
Industry benchmarks
- Simple interest earned$1,500
- Simple total$11,500
- Compound interest$1,576
- Compound total$11,576
- Compound advantage$76
Key insights
Where simple interest actually shows up
Auto loans, personal loans, and some short-term promotional bonds use simple interest. Most everything else (savings, mortgages, credit cards) compounds.
Compound interest is most powerful at long horizons
At year 1, simple ≈ compound. At year 30, compound at 7% earns ~3x simple at the same rate. Time multiplies the gap.
Credit cards compound DAILY
Credit card interest compounds every day on your unpaid balance. That's why a $5,000 balance at 22% APR can grow to $7,000 in a year if untouched.
Recommended actions(2)
For loans, ASK about simple vs compound
High prioritySimple-interest loans are usually consumer-friendly. Compound (especially daily compound) costs more. Verify before signing.
For savings, prefer DAILY compounding
Medium priorityMost modern high-yield savings accounts compound daily. The difference vs monthly is small ($1-5 per $10K/year) but free.
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This tool is for educational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional for advice specific to your situation.