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Finance & Banking vocabulary · Interest & Exchange Rates

Simple interest

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, simple interest means: Interest calculated only on the original amount borrowed or deposited, not on interest already earned, so it grows by the same amount each period.

In Turkish: basit faiz

How it is used

Used in training, loan calculations and short-term deposits. The formula is principal × rate × time. Many short-term deposits pay simple interest at maturity, while longer savings usually compound. Comparing simple and compound interest is one of the first lessons in any finance course.

Example sentences

  1. With simple interest, 10,000 lira at 10% a year earns exactly 1,000 lira each year.

  2. This 32-day deposit pays simple interest at maturity.

Common collocations

  • simple interest rate
  • calculate simple interest
  • simple interest formula
  • compound interestInterest calculated on both the original amount and the interest already added, so the total grows faster over time than with simple interest.
  • interest rateThe price of borrowing money, shown as a percentage of the amount borrowed or saved for a period, usually one year.
  • principalThe original amount of money borrowed or invested, not including interest. Each loan payment usually covers some interest and some principal.
  • time depositMoney placed in a bank for a fixed period, such as 32 days or one year, at an agreed interest rate. Taking it out early usually means losing some or all of the interest.
  • accrueTo build up gradually over time, as interest does on a loan or deposit; in accounting, to record income or costs when they are earned or incurred, not when cash moves.

More terms: Interest & Exchange Rates

Practise with graded reading

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This page explains English vocabulary for learners. It is not financial advice.