Simple vs Compound: $5,000 at 3% for 5 Years
At 3% for 5 years, simple interest yields $5,750 while compound interest yields approximately $5,796.
How to use this tool
- Enter principal, annual interest rate and years in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your compound balance and the full breakdown beneath it.
Over shorter timeframes, the gap between simple and compound interest is small but still meaningful.
Frequently asked questions
- When do simple and compound give the same result?
- At t = 1 year (with annual compounding) they are identical. Beyond year 1 compound interest always exceeds simple interest for positive rates.
- Which does a bank savings account use?
- Most savings accounts and mortgages use compound interest. Some short-term loans and bonds use simple interest.