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Simple and compound interest

Enter the amount, rate and term to see the final amount, the interest in each period and the gap between simple and compound interest, in charts and a period-by-period table.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

When the rate and the term use different units, simple interest uses the proportional rate and compound interest the equivalent rate.

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—Final amount
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How the balance grows

Balance at the end of each period: the principal plus the interest added to it.

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Interest in each period

With simple interest the amount never changes; with compound interest it grows because it is charged on the balance, which already includes past interest.

Tap the chart to see the values.

Period-by-period table

Next step

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Method, assumptions and sources

Formulas

Simple interest: interest per period = principal × rate; final amount = principal × (1 + rate × periods)
Compound interest: final amount = principal × (1 + rate)^periods; interest per period = previous balance × rate
Proportional rate (simple): yearly ÷ 12 or monthly × 12; equivalent rate (compound): (1 + yearly)^(1/12) − 1 or (1 + monthly)^12 − 1
Doubling time: compound = log 2 ÷ log(1 + rate); simple = 1 ÷ rate

Assumptions and limits

  • Theoretical calculation with a constant rate; real savings and loans have taxes, fees and their own compounding rules.
  • It ignores taxes, fees, inflation, deposits and withdrawals; term from 1 to 600 periods.

Official sources and references

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is always calculated on the starting amount. Compound interest is calculated on the balance, which already includes past interest, so it earns interest on interest and grows faster over time.

What formulas does the calculator use?

Simple: final amount = principal × (1 + rate × periods). Compound: final amount = principal × (1 + rate)^periods. If the rate and term use different units, simple interest uses rate ÷ 12 and compound interest uses (1 + yearly rate)^(1/12) − 1.

How do I read the default example?

With $10,000 at 6% a year for 10 years, compound interest gives $17,908.48 and simple interest $16,000.00. The $1,908.48 difference is interest on interest, about 32% more interest. With compounding, the money doubles in about 11.9 years.

How do I convert a yearly rate into a monthly rate?

With compound interest, use (1 + yearly rate)^(1/12) − 1: 12% a year is about 0.949% a month. Dividing by 12 is only correct for simple interest. The calculator converts automatically when you choose different units.

Where is simple interest used in real life?

Rarely. Some late fees, short-term notes and a few car loans compute interest on the original principal. Savings accounts, CDs, mortgages, student loans and credit cards compound. Check how interest is applied in the contract.

What is the rule of 72?

A shortcut for compound interest: 72 divided by the rate in percent gives the approximate number of periods to double your money. At 6% a year it is about 12 years; the calculator shows the exact value of 11.9 years.

What does this calculator leave out?

It assumes a constant rate with no deposits, withdrawals, taxes, fees or inflation. For regular contributions use the compound interest calculator, and for loans with monthly payments use a loan calculator. For important decisions, ask the lender for the APR and full cost.

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What is the difference between simple and compound interest

Interest is the price of money over time. The two ways of charging it give the same result in the first period and then drift apart: simple interest is always calculated on the starting amount, while compound interest is calculated on the balance, which already includes the interest earned before.

Simple interest

Final amount = principal × (1 + rate × periods). Each period earns the same: $10,000 at 6% a year earns $600 every year, so after 10 years you have $16,000. Simple interest shows up in some late fees and short contracts, but rarely in savings or loans.

Compound interest

Final amount = principal × (1 + rate)periods. The same $10,000 at 6% a year becomes $17,908.48 in 10 years: $1,908.48 more than with simple interest. That extra is interest on interest, and it grows faster the longer the term. Savings accounts, certificates of deposit, mortgages and credit cards all compound.

Monthly or yearly rate?

When the rate and the term use different units, they must be converted. Simple interest uses the proportional rate (yearly ÷ 12). Compound interest uses the equivalent rate: (1 + yearly)1/12 − 1. A 12% yearly rate equals about 0.949% a month, not 1%. That is why an APY is always a bit higher than the nominal rate when interest compounds monthly.

The rule of 72

A quick way to estimate doubling time with compound interest: divide 72 by the rate in percent. At 6% a year, money doubles in about 12 years; at 9%, in about 8. The calculator shows the exact figure, log(2) ÷ log(1 + rate).

The same math works against you on debt: an unpaid card balance at 2% a month grows by about 27% in a year, not 24%.