simple interest

Principal-only rate calculation

Simple interest is interest calculated only on the original principal, not on any accumulated interest.

If you borrow $1,000 at 5% simple interest for three years, you owe $150 in interest—the same $50 each year.

This contrasts with compound interest, where interest accrues on previous interest.

Simple interest appears in some consumer loans and short-term lending.

calculation

principal

Chief school administrator

  • rateMeasured speed or charge
  • timeMeasured passage of moments
  • formulaFixed method or notation

percentage · multiplication · annual · periodic · compute · arithmetic · decimal · proportion · math · numeric

lending

borrower

One who takes temporarily

  • lenderOne who loans money
  • loanBorrowed money repaid later
  • debtMoney owed another

repayment · installment · term · maturity · due · schedule · collateral · default · promissory note · credit

savings

deposit

Place for safekeeping

fixed deposit · bank · balance · passbook · time deposit · money market · return · earnings · yield · payout

contrast

uncompounded

Not mixed together

basic · elementary · uncomplicated · beginner · introductory · fundamental

Categories
Opposites
interest calculation method

simple interestcompound interest

Returns on reinvested earnings

accrued interest · exponential growth

financial complexity

simple interestcompound interest

Returns on reinvested earnings

amortization · derivatives · adjustable-rate mortgage

Family

simple, interest, simplicity, simplify, simplified, simpler, simplest, simpleton, simplistic

Familiarity
Top 200,000
Profile
Used worldwide · Timeless · Abstract · Rated G