Compound Interest Calculator

See how your savings grow over time with compound interest and regular monthly contributions. Visualise the power of compounding with an interactive chart and full year-by-year breakdown.

Last updated: April 2026

Your savings
Monthly compounding is the most common for UK savings accounts and ISAs.
Total value
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Starting amount-
Total contributions-
Interest earned-
Growth over time
YearDepositsInterestBalance

How compound interest works

Compound interest is interest earned on both your original deposit and on previously accumulated interest. Unlike simple interest, which only applies to the principal, compound interest accelerates your savings growth over time. The more frequently interest compounds, the faster your money grows, though in practice the difference between monthly and daily compounding is small.

The compound interest formula

The calculation uses A = P(1 + r/n)^(nt) + PMT x [((1 + r/n)^(nt) - 1) / (r/n)], where P is your starting amount, r is the annual interest rate, n is how many times interest compounds per year, t is the number of years, and PMT is your regular contribution. This calculator handles contributions at the start of each compounding period.

Why time matters more than amount

The true power of compound interest is in the time dimension. Someone who starts saving £200 a month at age 25 will have significantly more at retirement than someone who saves £400 a month starting at 40, even though they contribute less in total. This is because the earlier saver has more years for their interest to compound on itself.

What your results mean

The interest earned figure shows the total growth generated purely from compounding. Compare this to your total contributions to see the "free money" effect. On longer timeframes with consistent contributions, it is common for interest to exceed total contributions, which is the inflection point where your money is truly working for you.

Frequently asked questions

For easy-access savings accounts, UK rates in 2026/27 typically range from 3.5% to 5%. Fixed-rate bonds may offer slightly more. For long-term investment projections (stocks and shares ISAs), a common assumption is 5% to 7% after inflation, though past performance does not guarantee future returns.
No. This shows gross returns before tax. Basic rate taxpayers can earn up to £1,000 in savings interest tax-free (the Personal Savings Allowance), higher rate taxpayers get £500, and additional rate taxpayers get nothing. Interest earned in an ISA is completely tax-free regardless of how much you earn.
No. The figures shown are nominal (not adjusted for inflation). To estimate real returns, subtract the expected inflation rate (typically 2% to 3% long-term) from your interest rate. For example, 5% nominal with 2.5% inflation gives approximately 2.5% real growth.
Monthly compounding means interest is calculated and added to your balance 12 times a year. Annual compounding does it once. Monthly compounding produces a slightly higher return because you earn interest on interest sooner. At 5% over 10 years on £10,000 with no contributions, monthly compounding gives £16,470 versus £16,289 with annual compounding, a difference of about £181.