Simple interest: Under the simple interest

Under the simple interest method, interest is charged/earned only on the principal amount and there is no interest on interest . Simple interest is the amount earned on the principal amount at a given rate and time. Learn the definition of simple interest and its formula. Simple interest (SI) refers to the percentage of interest charged or yielded on the principal sum for a specific period. Borrowed funds (loans), investments, and deposits are considered the principal sum. Calculating Simple Interest is easier than calculating compound interest . Also, the amount of interest remains the same through consecutive periods of borrowing or deposit. SI is the fee borrowers pay lenders. Simple interest is a straightforward method for calculating the interest charge on a loan or investment . It is calculated only on the original principal amount and does not include interest on the interest that has accrued in previous periods.