top of page

Simple Interest

The amount of simple interest charged is based only on the principal amount. For instance, a $1,000 loan charged with a simple interest of 2% annually would accumulate $20 in interest each year, regardless of how long the loan is held. Because the interest grows at a constant rate, simple interest loans are less costly for borrowers, and less common in real-life than their compounded counterparts.

Explore simple interest with our online calculator.

Simple Interest

A $1,000 loan with an APR of 10%, modeled with simple interest.

Back to Glossary

Deposit Insurance

bottom of page