Interest Rates — Simple vs Compound Explained

Use the Free Calculator

Try our Compound Interest Calculator — instant results, no sign-up.

Overview

Understanding the difference between simple and compound interest explains why credit card debt grows so fast and why starting to save early is so valuable.

The Formula

Simple: I = P×r×t | Compound: A = P×(1+r)ⁿ

Standard formula used by professionals worldwide

Worked Example

Step-by-step

100,000 at 10% for 5 years | Simple = 150,000 | Compound = 161,051 | Difference = 11,051

Key Points

Accuracy: Results are as accurate as the inputs you provide
Units: Always use consistent units throughout your calculation
Privacy: All calculations on CalcHub Pro run in your browser — nothing is sent to any server

Frequently Asked Questions

Which do banks use for savings?

Compound — which works in your favour as a saver.

Which do credit cards use?

Compound — which works against you as a borrower.

How does APR vs AER differ?

APR is nominal annual rate. AER (effective annual rate) accounts for compounding frequency.

𝕏 Share 💬 WhatsApp

Ready to Calculate?

Free, instant, no sign-up required.

Open Compound Interest →