Simple vs Compound Interest Calculator
Compare simple and compound interest side by side. See how the gap widens year after year.
Simple interest pays the same dollar amount every year. Compound interest pays a growing amount.
In the early years the two look similar. Over decades the compound line pulls far ahead.
How it works
Simple interest multiplies the starting amount by the rate and the years. Compound interest applies the rate to the growing balance.
The chart shows both lines. The table shows the gap each year.
The formula
P = starting amount, r = rate as a decimal, t = years, n = compounding periods a year.
Tips
- Most savings and investments compound. Most short term loans, like some car title loans, use simple interest.
- The gap after 30 years at 6% is more than the original amount.
Frequently asked questions
Which is better for a borrower?
Simple interest. The lender never charges interest on interest.
Which is better for a saver?
Compound interest, every time. It is the engine behind long term wealth.
This is not financial advice. Nothing on this site is investment, tax, legal or financial advice of any kind.
The calculators give simplified estimates from the numbers you enter. They ignore taxes, fees, rate changes and real market returns, and they can be wrong.
Do not make financial decisions based on these results. Speak to a licensed financial adviser, accountant or lender before acting, and read the full disclaimer.