Simple interest

Simple interest is the interest charge on borrowing that's calculated using an original principal amount only and an interest rate that never changes. It does not involve compounding, where borrowers end up paying interest on principal and interest that grows over multiple payment periods.

Simple interest can be advantageous for borrowers because of its relatively lower cost of money. However, bear in mind that, because of its simple calculation, it gives only a of cost that may not account for other charges/fees that a loan may include.

Calculate your simple interest profits with the calculator on the right!