Simple vs Compound Interest Comparison
Compare simple and compound interest side by side. Enter principal, rate and years to see both final balances and a chart showing how compounding pulls ahead over time.
How to use this tool
- Enter principal, annual interest rate and years in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your compound balance and the full breakdown beneath it.
Simple interest: A = P(1 + rt). Interest is always calculated on the original principal.
Compound interest: A = P(1 + r)^t. Interest is added to the principal each year and itself earns interest — this is the compounding advantage.
Frequently asked questions
- When do simple and compound give the same result?
- At t = 1 year (with annual compounding) they are identical. Beyond year 1 compound interest always exceeds simple interest for positive rates.
- Which does a bank savings account use?
- Most savings accounts and mortgages use compound interest. Some short-term loans and bonds use simple interest.