Banking · Saving · HTML Lesson
What Is Simple Interest?
An online lesson and video on the basics of simple interest — how it is calculated, how it applies to savings and loans, and how to use the simple interest formula (I = P × R × T). The lesson and video are free. An accompanying worksheet is available with Full Membership.
What Students Learn
Learning objectives
- What simple interest is — the cost of borrowing money or the benefit of saving it, without compounding
- The simple interest formula: I = P × R × T (Principal × Rate × Time)
- Key terms: principal (the original amount), rate (interest percentage per year), and time period
- How to calculate interest earned on a savings account given a principal, rate, and time
- How simple interest applies to loans — personal loans, car loans, and education loans
- Why understanding interest is essential for making informed borrowing and saving decisions
Video Lesson
Watch: What Is Simple Interest?
For Teachers
How to use this lesson
Show the video to introduce the concept and the formula. After viewing, work through several practice calculations as a class before students attempt the worksheet independently. The lesson page includes a detailed lesson outline covering the formula, principal, rate, time period, and applications to both savings and loans.
Discussion: After practicing the formula, ask students where simple interest appears in their own lives — or will appear soon. A first car loan, a student loan, or a savings account are all practical entry points for making the math meaningful.
Best positioned after introducing savings accounts and earning interest concepts, and before moving to compound interest. Works in Grades 6–12 and reinforces both financial literacy and math skills simultaneously.
Lesson Plan
Understanding simple interest — full lesson plan
Objective
Students will learn what simple interest is and how to calculate it using the simple interest formula, and understand how it relates to saving and borrowing money.
Materials needed
- The “What Is Simple Interest?” video (above)
- Calculators; the printable worksheet (below)
Procedure
Introduction. Introduce interest as the benefit of investing money or the cost of borrowing it, and explain that simple interest applies only to the original principal.
Video presentation. Show the “What Is Simple Interest?” video and have students take notes.
Discussion. Discuss how simple interest is used and calculated. Define the key terms — principal (P), rate (R, as a percent per year), and time (T) — and work through the formula I = P × R × T with an example.
Worksheet. Students complete the worksheet, then review the questions together.
The lesson content and video above are free to use. The printable worksheet below is available with Full Membership.
Printable Worksheet · Full Membership
What Is Simple Interest? — Worksheet & Answer Key
A printable worksheet on simple interest — principal, rate, time, and the I = P × R × T formula — with an answer key for teacher use.
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