복리 vs 단리: 차이점은 무엇인가?

When it comes to growing your money — or understanding the cost of borrowing — the distinction between simple interest and compound interest is one of the most important financial concepts to grasp. While both involve earning (or paying) a percentage on a principal amount, the way they calculate that percentage leads to dramatically different outcomes over time.

Simple interest is calculated only on the original principal amount using the formula I = P × r × t, where P is the principal, r is the annual interest rate as a decimal, and t is the time in years. The interest earned each year remains constant. If you invest $5,000 at 6% simple interest, you earn exactly $300 every year regardless of how long you hold the investment.

Compound interest, on the other hand, is calculated on the principal plus all previously accumulated interest. The formula is A = P × (1 + r/n)^(n×t), where n represents how many times interest compounds per year. With compound interest, each period's interest calculation uses a larger base than the last.

Let us compare these side by side with a concrete example. Imagine you invest $5,000 at 6% annual interest for 10 years:

With simple interest: I = $5,000 × 0.06 × 10 = $3,000. Your final amount is $8,000.

With compound interest (compounded monthly): A = $5,000 × (1 + 0.06/12)^(12×10) = $9,096.98. Your final amount is $9,096.98.

That is a difference of $1,096.98 — compound interest earned you over 36% more than simple interest on the same investment.

To understand why, let us look at how the interest accumulates year by year for the first five years:

Year 1: Simple interest earns $300 ($5,300 total). Compound interest earns $308.03 ($5,308.03 total). Year 2: Simple interest earns $300 ($5,600 total). Compound interest earns $326.99 ($5,635.02 total). Year 3: Simple interest earns $300 ($5,900 total). Compound interest earns $347.15 ($5,982.17 total). Year 4: Simple interest earns $300 ($6,200 total). Compound interest earns $368.55 ($6,350.72 total). Year 5: Simple interest earns $300 ($6,500 total). Compound interest earns $391.28 ($6,742.00 total).

With simple interest, you earn exactly $300 each year. With compound interest, the amount you earn increases every year because you are earning interest on a growing balance. By year five, the compound interest payment is already 30% larger than the simple interest payment.

In the real world, simple interest is used in certain specific situations. Some car loans use simple interest calculation, as do Treasury bills and short-term personal loans. In these cases, interest is calculated only on the remaining principal balance.

Compound interest is far more common and appears in savings accounts, certificates of deposit, investment accounts, credit cards, and most mortgages. Banks and financial institutions typically compound interest daily or monthly.

This distinction becomes especially important when compound interest works against you. Credit card debt is one of the most dangerous examples. If you carry a $5,000 balance on a credit card with a 20% APR compounded daily, and you only make minimum payments, you could end up paying more than $8,000 in interest alone over many years. The interest compounds on itself, making the debt grow faster than many people expect.

Understanding the difference between these two types of interest can directly impact your financial decisions. When saving or investing, seek out accounts that offer compound interest — and the more frequently it compounds, the better. When borrowing, understand whether you are paying simple or compound interest, and prioritize paying off compound-interest debt as quickly as possible.

When you use CalcMyCompound, the calculator shows both your total final amount and the total interest earned, making it easy to see exactly how much compound interest contributes to your investment growth over any time period.