Simple Interest vs Compound Interest: Formula Comparison

Retained from the earlier FinanceMath website. This historical guide has not yet completed the rebuild’s editorial review. Tax rates, eligibility rules and dated claims must be checked against current official sources. For tested calculation methods, use the current calculators.

Simple Interest vs Compound Interest: Formula Comparison

Break down the structural mathematical differences between simple loan calculations and compound growth.

Mathematical Divergence

Simple interest remains linear (I = P × r × t). Compound interest grows exponentially, earning return on prior interest cycles.