Scope
No deposits, withdrawals or changing rates.
This isolates the mathematical difference between simple and compound interest on one starting principal.
Interest comparison
Simple vs Compound Interest Calculator
Compare interest calculated only on the original principal with interest that compounds at a chosen frequency.
Simple-interest balance—
Compound-interest balance—
Additional compound interest—
Principal only
Total interest—
Principal plus credited interest
Total interest—
Effective annual yield—
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Formulas
Simple balance: P × (1 + r × t). Compound balance: P × (1 + r ÷ n)^(n × t), where n is the number of compounding periods per year.
Interpretation
Compounding frequency changes the effective annual yield.
At the same nominal rate, more frequent compounding credits interest sooner and produces a higher effective annual yield. The difference grows with rate and time.
Source
Compound interest includes interest on earlier interest.
Investor.gov defines compound interest as interest earned on principal and previously accumulated interest.