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Simple vs Compound Interest Calculator

See the difference compounding interest can make over time when compared to simple interest.

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Educational use only. Availability & features vary by state and insurer. Guarantees are backed by the claims‑paying ability of the issuing insurance company.

Simple vs. Compound Growth Calculator

Quickly see the difference compounding can make over time. Adjust inputs, compare totals, then use the insight to position annuity growth conversations.

Simple Ending Balance
$0
Compound Ending Balance
$0
Total Contributions
$0
Principal + Added Funds
Compound Advantage
$0
View Year-by-Year Breakdown
Year Simple Balance Compound Balance Contribution This Year Cumulative Contributions Simple Interest Earned Compound Interest Earned

Educational illustration only; not a projection or guarantee. Real annuity values may differ based on product features, crediting methods, caps, spreads, fees, and surrender schedules.

13 hours ago
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Compound vs. Simple Interest: FAQs

What’s the difference between simple and compound interest?

Simple interest is calculated only on your original principal. Compound interest is calculated on your principal plus any interest you’ve already earned—so your money can grow faster over time.

Use simple interest for short-term loans or products that don’t compound (some personal loans, short-term notes). Use compound interest for savings, CDs, MYGAs, and investments where interest builds on interest.

Frequency can be annually, semiannually, quarterly, monthly, daily, or continuously. The more often it compounds, the faster your balance grows. For example, monthly compounding generally yields more than annual compounding at the same rate.

You’ll typically enter:

  • Principal (starting amount)
  • Interest rate (annual)
  • Time period (years or months)
  • For compound interest: compounding frequency and optional recurring contributions

If enabled, yes. You can add monthly or annual contributions to see how consistent saving boosts compound growth. Note: simple interest typically doesn’t model contributions the same way since it doesn’t earn interest-on-interest.

No. This tool is for education and planning. Actual results depend on product terms, credited rates, compounding rules, fees, and taxes. For guaranteed rates, look at products like MYGAs, which offer a fixed rate for a set term.

MYGA Example: simple vs. compound interest

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  • Simple interest (for comparison only):

    • Interest each year: $100,000 \times 0.06 = $6,000
    • Total interest over 5 years: $6,000 \times 5 = $30,000
    • Ending value: $100,000 + $30,000 = $130,000
 

  • Compound interest (how a MYGA typically credits):

    • Year 1: $100,000 \times 1.06 = $106,000
    • Year 2: $106,000 \times 1.06 = $112,360
    • Year 3: $112,360 \times 1.06 = $119,101.60
    • Year 4: $119,101.60 \times 1.06 = $126,247.70
    • Year 5: $126,247.70 \times 1.06 = $133,822.56
    • Ending value: $133,822.56
    • Total interest earned: $33,822.56
 

  • What this shows:

    • With the same 6% rate, compounding in a MYGA yields roughly $3{,}823 more over 5 years than simple interest because you earn interest on prior years’ interest.
 

  • Quick rule of thumb:

    • For a fixed rate r compounded annually over n years, the compound result is P×(1+r)n. At 6% for 5 years, 100,000×1.065≈133,822.56

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