Interest that grows on the principal only
Calculate simple (non-compounding) interest on a principal amount over time, and the total amount owed or earned.
interest = principal × rate × time
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal every period, so it grows linearly. Compound interest is recalculated on the growing balance (principal plus prior interest), so it grows faster the longer money is left in.
Where is simple interest actually used?
Some personal loans, short-term promissory notes, and Shariah-compliant financing (like PTPTN's Ujrah scheme) use a flat, simple-interest style fee instead of compounding — it's simpler to understand and, for the borrower, usually cheaper over long periods than an equivalent compound rate.