Simple interest only calculates interest on the original principal. Compound interest calculates interest on principal + past interest.
Simple interest (linear growth)
Formula
Interest = P × r × t
Simple interest is common in some short-term arrangements. It’s easy to compute and grows linearly with time.
Compound interest (exponential growth)
With compounding, the growth curve accelerates because each period’s interest becomes part of the base for the next period.
Try it instantly
Use Simple Interest Calculator () and Compound Interest Calculator (/tools/compound-interest-calculator).