How much is 100,000 yuan at 3.5% for 3 years?

Simple: 100,000 x 3.5% x 3 = 10,500 yuan. Compounded annually: about 10,872 yuan, roughly 372 yuan more.

What is the power of compound interest?

Over long periods, compound interest grows exponentially. 10,000 yuan at 5% annual compound for 30 years becomes about 43,219 yuan - more than 4 times the original amount.

Should I choose simple or compound for my savings?

Compound is almost always better for savings because interest earns interest. For loans, simple interest usually costs less. Always compare the total amount payable.

Interest Calculator — Simple & Compound

2026 reference deposit rates (guidance)

Demand 0.2% · 1-year 1.45% · 3-year 1.95% · 5-year 2.0%. Actual rates vary by bank — always confirm with your bank.

Interest formulas

Simple: I = P × r × t Total = P + I Compound: Total = P × (1 + r)ᵗ I = Total − P

P = principal, r = annual rate (as decimal), t = years. For monthly compounding use (1 + r/12)^(12t).

Simple vs compound interest — what is the difference?

Simple interest is calculated only on the original principal (P). It stays the same every period. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time — interest on interest.

Example: ¥10,000 at 5% for 3 years. Simple: 10,000 × 5% × 3 = ¥1,500. Compound (annual): 10,000 × 1.05³ − 10,000 = ¥1,576.25. The gap widens dramatically over longer periods.

The power of compounding

Albert Einstein reportedly called compound interest "the eighth wonder of the world." Over long periods, small amounts can grow surprisingly large. For example, ¥10,000 at 5% annual compound for 30 years becomes ¥43,219 — more than 4× the original. At 7% it becomes ¥76,123 — more than 7×.

The compounding frequency also matters. Monthly compounding grows slightly faster than annual compounding because interest is added and earns more interest more often. Use the monthly compounding option in the calculator to see the difference.

Practical examples

Bank deposit: ¥100,000 at 1.95% for 3 years (simple) = 100,000 × 1.95% × 3 = ¥5,850 interest. Total = ¥105,850.
Investment fund: ¥50,000 at 6% annual compound for 10 years = 50,000 × 1.06¹⁰ ≈ ¥89,542. Interest earned ≈ ¥39,542.
Loan comparison: A ¥200,000 loan at 4.5% for 1 year. Simple interest = 200,000 × 4.5% = ¥9,000. This is how most personal loans are calculated.
Savings goal: If you want ¥1,000,000 in 20 years at 5% compound, you need about ¥376,889 today (1,000,000 ÷ 1.05²⁰).

Step-by-step: calculate interest

Enter the principal (P). The initial amount of money — your deposit, investment or loan.
Enter the annual rate. As a percentage (e.g. 3.5 for 3.5%). The calculator converts it to a decimal internally.
Enter the number of years. The duration of the deposit, investment or loan.
Choose simple or compound. Simple for bonds and most loans; compound for savings accounts and investments.
Click Calculate. You see the interest earned and the total amount.

Tips for better returns

Start early. Time is the most powerful factor in compounding. Even small amounts grow significantly over decades.
Compare rates across banks. Interest rates vary by bank and term. A 0.5% rate difference on ¥100,000 over 5 years is ¥2,500.
Understand the risk-reward tradeoff. Higher returns usually mean higher risk. Bank deposits are safe but low-yield; funds and stocks offer higher potential returns with volatility.
Beware of nominal vs real returns. If inflation is 2% and your deposit pays 1.95%, your real return is negative. Consider investments that beat inflation.

FAQ

What is the difference between simple and compound interest?

Simple interest pays only on the principal: I = P × r × t. Compound interest pays on principal plus accumulated interest: A = P × (1 + r)ᵗ. Over long periods compounding grows dramatically faster.

How much is ¥100,000 at 3.5% for 3 years?

Simple: 100,000 × 3.5% × 3 = ¥10,500. Compounded annually: 100,000 × (1.035³ − 1) ≈ ¥10,872 — about ¥372 more.

What is the power of compounding?

Over long periods it grows exponentially. ¥10,000 at 5% annual compound for 30 years ≈ ¥43,219 — more than 4× the original.

How often does interest compound?

Depends on the product. Savings accounts often compound monthly/daily; bonds and loans usually use simple or annual compounding. Check the terms.

Simple or compound for savings?

Compound is almost always better for savings. For loans, simple usually costs less. Always compare the total payable.