The coherence time, and thus sensitivity, of trapped atom interferometers that use nondegenerate gases are limited by the collisions between the atoms. An analytic model that describes the effects of collisions between atoms in an interferometer is developed. It is then applied to an interferometer using a harmonically trapped non-degenerate atomic gas that is manipulated with a single set of standing wave laser pulses. The model is used to find the optimal operating conditions of the interferometer and direct Monte-Carlo simulation of the interferometer is used to verify the analytic model.