Simple interest is always calculated only on the original amount you deposited (the principal). Compound interest also earns interest on the interest that has already been added. The difference may look small in the first few years, but it grows wider over time. Change the principal, interest rate, and time period with the sliders and see for yourself.
Simple interest formula: Final amount = Principal × (1 + Interest rate × Time period). The interest added each year is always the same, so the graph is a straight line (a linear function).
Compound interest formula: Final amount = Principal × (1 + Interest rate)Time period. Because interest is recalculated each year on the entire amount including previously earned interest, the graph is a curve that gets steeper (an exponential function).