Interest Calculator
Compare simple interest vs compound interest side by side for any principal, rate and time period.
Interest Details
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Simple Interest vs Compound Interest
Simple interest is calculated only on the original principal: Interest = P × r × t. Compound interest is calculated on the principal plus any interest already earned, so your money grows faster the longer it compounds: A = P × (1 + r/n)n×t, where n is the number of compounding periods per year.
This is why savings accounts, CDs and investment accounts that compound monthly or daily grow faster over time than a simple-interest loan of the same rate.
Frequently Asked Questions
Compound interest always grows faster than simple interest at the same rate over the same period, because it earns "interest on interest." The more frequently it compounds (daily vs. monthly vs. annually), the faster it grows.
Use the frequency stated by your bank or investment account — most U.S. savings accounts and CDs compound daily or monthly. Check your account terms for the exact frequency.
Continuous compounding is the mathematical limit of compounding more and more often — instead of adding interest daily, hourly, or every second, it's added at every possible instant. It's calculated with A = P × er×t (where e ≈ 2.71828), instead of the discrete formula used for annual, monthly, or daily compounding. In practice, almost no real bank account compounds continuously — daily compounding already gets extremely close to the same result — but it shows up in economics, academic finance, and some bond and options pricing models as the theoretical upper bound on how fast compounding can grow your money.