simple interest

American  

noun

1. interest payable only on the principal; interest that is not compounded.

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simple interest British  

noun

1. interest calculated or paid on the principal alone Compare compound interest

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simple interest Scientific  

1. Interest computed only on the original principal and not on the sum of the principal plus accrued interest. The amount of simple interest remains constant.

2. Compare compound interest

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Etymology

Origin of simple interest

First recorded in 1790–1800

Example Sentences

To understand how compound interest works, let’s look at another kind of interest: simple interest.

From Seattle Times • Aug. 1, 2022

Sean’s new car loan statement said he would pay $4,866.25 in interest from a simple interest rate of 8.5% over five years.

From Textbooks • Sep. 23, 2020

Robin deposited $31,000 in a bank account that earned simple interest at an interest rate of 5.2%.

From Textbooks • May 6, 2020

To find the rate, we use the simple interest formula, substitute in the given values for the principal and time, and then solve for the rate.

From Textbooks • Apr. 22, 2020

Interest is not compounded, unless the depositor withdraws the interest and redeposits it, but simple interest continues to accrue annually on a certificate so long as it is outstanding, without limitation as to time.

From Modern Economic Problems Economics Volume II by Fetter, Frank Albert