The first numbers in the calculator are for a principal of 1,000,000 yen at 3% annual interest for 10 years.
You can replace these with your own numbers.
History's lessons for today's decisions ／ Calculate with Your Own Numbers
Calculating simple and compound interest
What is the difference over ten years from a 2-point difference in the interest rate?
Simple and Compound Interest in 3 Minutes
1See it
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With simple interest, interest is only added to the principal.
Principal × (1 + Annual Rate × Number of Years)
With compound interest, interest is added to the interest too.
Principal × (1 + Annual Rate) ^ Number of Years
How much of a difference does a 2 percentage point change in the rate make over 10 years?
When you borrow money, the same formula works against you.
The later your payments are, the more interest gets added to the interest.
Enter your principal, annual rate, and number of years to see the difference between simple and compound interest.
2In numbers
1,000,000yen
The initial principal in the calculator. Compare simple and compound interest at 3% per year for 10 years.
3What would you do?
Your loan payment is going to be a little late. Do you think, 'It's all the same if I pay it all back in a lump sum later'?
Pick one
I think it's the same.
When you're borrowing, the compound interest formula works against you. The later your payments are, the more interest gets added to the interest. The amount you have to pay back increases the longer you delay.
I think it increases the later I pay.
That's right. The later your payments are, the more interest gets added to the interest. The same mechanism that makes your savings grow will increase the amount you have to pay back when you're the borrower.
Enter your own principal, annual rate, and number of years into the calculator to see the difference in actual amounts.
4Read more
When to use When depositing, borrowing, or making a late repayment.
Simple interest accrues only on the principal, while compound interest accrues on the interest as well. For borrowers, the same formula works in reverse: the later the repayment, the more interest accrues on the interest.
Try with your own numbers
If you change the numbers, it recalculates on the spot. The formula is written below.
Input value
Output value
Simple interest after ten years (after n years)（10,000 yen）—
Compound interest after n years（10,000 yen）—
Difference between compound and simple interest（10,000 yen）—
Formula Simple Interest = Principal × (1 + Annual Rate × Number of Years). Compound Interest = Principal × (1 + Annual Rate)^Number of Years
Related Lectures and Notes
P2 P6 Calculating the accumulation of fees
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