Understanding Simple Interest
What exactly does "simple interest" mean? It's a common question with a simple answer.
Simple interest is an accrual method. Interest accrues on a daily basis on the unpaid principal balance on the account. Each payment you make will first pay down any accrued interest, then the rest will apply to the principal or other applicable fees. You can calculate simple interest by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
Watch our short video for an illustration on how simple interest works. Still have questions? See our most frequently asked questions below.