Understanding the simple interest calculator
Simple interest is charged or earned only on the original principal: interest = principal × rate × time. Unlike compound interest, earlier interest never earns anything itself, so growth is a straight line. Many auto loans, short-term personal loans, and bond coupons work this way.
Over short periods simple and compound interest barely differ, but the gap widens fast: $10,000 at 5% simple interest earns $5,000 over ten years, while monthly compounding earns about $6,470. When a product advertises a rate, always check which kind it is the same number can mean noticeably different money.
Results are estimates for education only and are not financial advice.