Compound interest and simple interest

What you'll learn

1. 1

   Imagine you lend a friend £100. Simple interest means they pay you back the £100 plus a little extra each year — like a thank you fee.

2. 2

   Simple interest is worked out from which amount?

3. 3

   Drag the slider to see how simple interest grows on £100 at 10% for 3 years.

4. 4

   Let's work out simple interest on £200 at 5% for 3 years.

5. 5

   Now imagine compound interest — it's like snowballing. Each year, the 'thank you fee' is worked out on the NEW total, not the original.

6. 6

   Drag the slider to see how compound interest grows on £100 at 10% for 3 years.

7. 7

   Let's work out compound interest on £200 at 5% for 3 years.

8. 8

   Which type of interest gives you MORE money after 3 years?