Interest Calculator
Compare simple interest vs. compound interest on a lump sum over time, with adjustable compounding frequency.
How this calculator works
- Enter your principal (starting amount), annual interest rate and time period in years.
- Choose a compounding frequency for the compound interest calculation.
- The calculator shows simple interest and compound interest side by side.
This calculator compares two ways interest can grow a lump sum: simple interest (calculated only on the original principal) and compound interest (calculated on principal plus previously earned interest). Compound interest almost always produces a larger total, and the gap widens with more frequent compounding and longer time periods.
Example
A $10,000 principal at 5% for 10 years: simple interest gives $10,000 × 0.05 × 10 = $5,000 (total $15,000). Compound interest, compounded monthly, gives about $6,470 in interest (total about $16,470) — roughly $1,470 more than simple interest.
Limitations
This models a one-time lump sum with no additional contributions. For ongoing monthly contributions, use the Savings Calculator instead.
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 recalculated periodically on the growing balance (principal plus interest already earned), so it compounds faster over time.
Which compounding frequency should I choose?
Use whatever your account or investment actually uses — check your statement or terms. Monthly is common for savings accounts; daily is common for some credit products.
Does this include monthly contributions?
No — this tool is for a single lump-sum principal. Use the Savings Calculator for a projection that includes regular monthly contributions.
Is a higher compounding frequency always better?
For a saver, yes — more frequent compounding grows your balance faster at the same nominal rate. For a borrower, more frequent compounding means more interest owed.