What this means
Three numbers, one useful answer
Simple interest equals principal × annual rate × years. A 1,000-unit deposit at an illustrative 5% rate for two years earns 100 units, for a total of 1,100. The rate is an example, not an available offer.
When simple interest helps
Use this model to understand a fixed principal deposit or a basic interest agreement. It does not model an amortizing loan, where repayments change the outstanding principal. For a home loan, use the mortgage calculator.
Compare like with like
The compound comparison starts with the same principal, rate, and duration, with no extra deposits. Over short periods the difference may be small. Over longer periods, reinvested interest can make a larger difference.
Good questions
Can I enter part of a year?
Yes. Enter 0.5 for six months or 1.5 for eighteen months. This calculator uses a year-based duration, not a contract-specific day-count convention.
Does the compound comparison change the interest rate?
No. The nominal annual rate stays the same. Only the reinvestment of interest and the selected compounding frequency change.