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| Parameter | Simple Interest | Compound Interest |
| Definition | Simple Interest can be defined as the sum paid back for using the borrowed money, over a fixed period of time. | Compound Interest can be defined as when the sum principal amount exceeds the due date for payment along with the rate of interest, for a period of time. |
| Formula | S.I. = (P × T × R) ⁄ 100 | C.I. = P(1+R⁄100)t − P |
| Return Amount | The return is much lesser when compared to Compound Interest. | The return is much higher. |
| Principal Amount | The principal amount is constant | The principal amount keeps on varying during the entire borrowing period |
| Growth | The growth remains quite uniform in this method. | The growth increases quite rapidly in this method. |
| Interest Charged | The interest charged on is for the principal amount. | The interest charged on it is for the principal and accumulated interest. |
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