Simple & Compound Interest Calculator
Enter your principal amount, annual interest rate, and time period to calculate both simple and compound interest side by side, so you can compare the difference directly.
About the Simple & Compound Interest Calculator
The difference between simple and compound interest looks small over a year but compounds (literally) into a large gap over a decade or more — which is exactly why understanding the distinction matters for anything from a savings account to a long-term loan.
The core difference
Simple interest is calculated only on the original principal, every period, for the life of the deposit or loan. Compound interest is calculated on the principal plus any interest already earned, so each period's interest is calculated on a slightly larger base than the last. Over short periods the two are close; over long periods compound interest pulls meaningfully ahead.
Why compounding frequency matters
At the same nominal annual rate, interest compounded monthly earns slightly more than interest compounded annually, because each month's interest starts earning its own interest sooner rather than waiting a full year. The effect is real but usually modest — this tool lets you compare annual, semi-annual, quarterly, and monthly compounding side by side on the same principal and rate to see exactly how much difference the frequency makes for your numbers.
Frequently Asked Questions
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal for the whole period. Compound interest is calculated on the principal plus any interest already added, so it grows faster the longer the time period and the more frequently it compounds.
Does compounding frequency make a real difference?
Yes, though usually a modest one — monthly compounding earns slightly more than annual compounding at the same nominal rate, since interest starts earning its own interest sooner.