Simple vs Compound Interest Calculator
The same rate, side by side, with and without compounding.
Method
How it works
Simple interest applies the annual rate only to the original principal for each year. Compound interest divides the rate by the chosen frequency and repeatedly applies it to the growing balance.
The primary result is the difference between the two ending values. Both calculations assume a constant rate and no additional contributions, tax or fees.
Common questions
Frequently asked questions
Why does compound interest usually exceed simple interest?
Compound interest earns returns on earlier interest, while simple interest continues to use only the original principal.
How does compounding frequency change the result?
The annual rate is divided and applied more often, which changes the effective growth over the term.
Does this include regular deposits?
No. Both sides use only the starting principal, rate and term.
Not financial advice. This calculator is for general informational purposes only. Check figures independently before making financial decisions.