As defined by Merriam Webster, simple interest is the interest paid on the original principal only of a loan or on the amount of an account.

It is the fee that a person pays for the use of someone else’s money. This type of interest is called simple interest and there is a simple formula for finding it.

simple interest = principle x rate x time

This is an important GED math concept to understand and practice. Be sure to always change the percent to a decimal before multiplying (i.e. 6% = .06). Also remember that time is based on years. So, if the time is 2 years you multiply by 2, but if the time is 6 months you multiply by 6/12 or 0.5 because it is a half a year.