Simple interest: drag the years
Drag the handle to set the years. The headline is simple interest on a fixed principal at the stated rate. Each year adds the same amount, because the rate applies to the original sum for the whole term. Compounding is a different rule.
Interest
$150.00
Total
$1,150.00
Each year adds the same $50.00, because the rate never sees interest already paid. Illustrative arithmetic, not a product quote or advice.
In short
- Drag the handle right for a longer term.
- Read interest, then the total. The gap between them is the original principal.
- Raise the rate slider and watch each year's slice get larger, still equal across years.
- Compare the shape with the compound interest explorer, which is not a straight line.
The same slice, every year
Simple interest never looks at interest already paid. Interest is principal times rate times years. How simple interest works is that product, with the simple interest calculator under the answer.
The line is straight. That is the rule a first algebra class actually meets, and the rule a lot of short consumer credit still uses when each period's interest is paid as it falls due.
Time is just time
Because the rate applies to the original principal, slicing the year into months does not change the product. Eighteen months is 1.5 years, not a monthly rate that then compounds.
If the product actually compounds, this picture understates the total. Simple against compound interest is the pair.
A longer term makes the gap visible
The two rules agree over a single year when compounding happens once a year. They part as soon as unpaid interest is allowed to sit on the balance. The compound interest explorer is the other rule, a curve you drag.
Common questions
Why is each year the same amount?
Because the rate never sees the interest already paid. It applies to the original principal for the whole term.
Is a credit card simple interest?
A US card on a carried balance is almost never this rule. Unpaid interest is added to the balance, which is compounding in all but name.
Is this a quote?
No. It is principal times rate times years. It is educational material, not advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.