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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

$
%
yrs

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

YearSimpleCompoundDifference
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.