What is simple interest?
Simple interest is principal × rate × time. The rate is the annual rate as a decimal, so 5% is 0.05. On 1,000 for 2 years at 5%, the interest is 100 and the amount is 1,100. The interest does not earn interest.
Compare simple interest, compound interest, and continuous compounding on the same principal.
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Figures ignore fees, taxes, and rate changes. This is not a bank quote or a loan offer.
| Year | Simple | Compound |
|---|---|---|
| 1 | 1050 | 1051.16 |
| 2 | 1100 | 1104.94 |
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Simple interest grows in a straight line. Compound interest bends upward because each new period starts from a larger balance. Putting both on one page makes that gap visible without a second form. The extra line is compound interest minus simple interest for the time you typed.
Time can be a fraction of a year, such as 2.5. A time of zero leaves the amount equal to the principal and the interest at zero, which is a useful check. Time above 100 years is refused so the table stays readable.
There is no payment, no fee, and no inflation adjustment. A loan payment is a different formula. Profit margin and salary conversion live on their own pages. If you only want one compounding schedule and a longer explanation of growth, the compound interest calculator is still there.
The effective annual rate is (1 + rate ÷ n) ^ n − 1, written as a percent. It answers how much one year of compounding is worth if you restated it as a single yearly rate. It is not an advertised APR from a lender.
Related on UtilGenie: Finance calculators, Compound Interest Calculator, Margin Calculator, Salary to Hourly Calculator, Tax Calculator.
Enter principal, rate, and time, then choose how often interest compounds.
Enter the principal, the annual rate in percent, and the time in years.
Choose yearly, quarterly, monthly, daily, or another whole number of compounds.
Compare simple interest, compound interest, and the continuous figure.
Read the year rows and copy the summary. The result is arithmetic, not a quote.
Simple interest is principal × rate × time. The rate is the annual rate as a decimal, so 5% is 0.05. On 1,000 for 2 years at 5%, the interest is 100 and the amount is 1,100. The interest does not earn interest.
Compound interest adds interest on earlier interest. The amount is principal × (1 + rate ÷ n) ^ (n × time), where n is how many times a year the interest compounds. The same 1,000 at 5% compounded yearly for 2 years becomes 1,102.50.
Choose a whole number from 1 to 365 times per year. Yearly, quarterly, monthly, and daily are the usual picks. Zero is rejected. A fractional count is rejected so the exponent stays a clean step.
Each finished year shows the simple amount and the compound amount side by side. A partial final year is included when the time is not a whole number. The table is a calculation, not a statement from a bank.
Continuous compounding is principal × e ^ (rate × time). It is the limit of compounding more and more often. The page shows it as a third figure so you can see how close daily compounding already is.
No. The principal cannot be negative, and the rate cannot be negative on this page. Nothing is a savings offer, a loan payment, or tax advice. The compound interest page is the older tool if you only want growth from one compounding schedule.
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