Compound vs. Simple Interest
Compare simple and compound interest totals for the same principal, rate, and term. See the difference and year-by-year growth in a table and bar chart.
Input
Result
Compound vs. simple difference (5% per year, 20 years)
$653,297.71
Extra you earn with compound interest
Simple total
$2,000,000.00
Compound total
$2,653,297.71
Difference (compound − simple)
$653,297.71
Balance over time (blue = simple / green = compound)
Year 1
Simple $1,050,000.00
Compound $1,050,000.00
Year 4
Simple $1,200,000.00
Compound $1,215,506.25
Year 7
Simple $1,350,000.00
Compound $1,407,100.42
Year 10
Simple $1,500,000.00
Compound $1,628,894.63
Year 13
Simple $1,650,000.00
Compound $1,885,649.14
Year 16
Simple $1,800,000.00
Compound $2,182,874.59
Year 19
Simple $1,950,000.00
Compound $2,526,950.20
Year 20
Simple $2,000,000.00
Compound $2,653,297.71
Year-by-year comparison
| Year | Simple | Compound | Difference |
|---|---|---|---|
| Year 1 | $1,050,000.00 | $1,050,000.00 | $0.00 |
| Year 2 | $1,100,000.00 | $1,102,500.00 | $2,500.00 |
| Year 3 | $1,150,000.00 | $1,157,625.00 | $7,625.00 |
| Year 4 | $1,200,000.00 | $1,215,506.25 | $15,506.25 |
| Year 5 | $1,250,000.00 | $1,276,281.56 | $26,281.56 |
| Year 6 | $1,300,000.00 | $1,340,095.64 | $40,095.64 |
| Year 7 | $1,350,000.00 | $1,407,100.42 | $57,100.42 |
| Year 8 | $1,400,000.00 | $1,477,455.44 | $77,455.44 |
| Year 9 | $1,450,000.00 | $1,551,328.22 | $101,328.22 |
| Year 10 | $1,500,000.00 | $1,628,894.63 | $128,894.63 |
| Year 11 | $1,550,000.00 | $1,710,339.36 | $160,339.36 |
| Year 12 | $1,600,000.00 | $1,795,856.33 | $195,856.33 |
| Year 13 | $1,650,000.00 | $1,885,649.14 | $235,649.14 |
| Year 14 | $1,700,000.00 | $1,979,931.60 | $279,931.60 |
| Year 15 | $1,750,000.00 | $2,078,928.18 | $328,928.18 |
| Year 16 | $1,800,000.00 | $2,182,874.59 | $382,874.59 |
| Year 17 | $1,850,000.00 | $2,292,018.32 | $442,018.32 |
| Year 18 | $1,900,000.00 | $2,406,619.23 | $506,619.23 |
| Year 19 | $1,950,000.00 | $2,526,950.20 | $576,950.20 |
| Year 20 | $2,000,000.00 | $2,653,297.71 | $653,297.71 |
How it works
- Simple interest total is calculated as "principal × (1 + rate × years)". Interest accrues only on the principal, so the same amount of interest is added every year.
- Compound interest total is calculated as "principal × (1 + rate)^years" (annual compounding). Because interest is earned on prior interest too, the balance snowballs over time.
- The headline figure is the difference: "compound total − simple total". The longer the term and the higher the rate, the wider this gap grows.
- The year-by-year table and bars show the simple total, compound total, and difference for each year from year 1 to the chosen term, visualizing how compound pulls ahead of simple.
- The annual rate is converted to a decimal internally (rate% ÷ 100), and amounts are rounded for display.
- Results are estimates. Real financial products may differ due to taxes, fees, payout frequency, and rate changes. Make investment decisions at your own discretion.
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Compound vs. Simple Interest