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Compound Interest Calculator

See how your savings could grow over time. Add a monthly amount, choose how often interest compounds, and get a year-by-year breakdown — or work out what to save to hit a goal. Free, no signup.

£
What you'll add each month
£
Annual rate (AER)
%
yrs
You’d have
£32,703
after 10 years
You put in£25,000
Interest earned+£7,703
Estimate only — a guide, not financial advice.

How it grows

Paid inInterest
1y2y3y4y5y6y7y8y9y10y

Year-by-year growth

YearPaid inInterestBalance
1£3,400£107£3,507
2£5,800£342£6,142
3£8,200£712£8,912
4£10,600£1,224£11,824
5£13,000£1,885£14,885
6£15,400£2,702£18,102
7£17,800£3,684£21,484
8£20,200£4,839£25,039
9£22,600£6,175£28,775
10£25,000£7,703£32,703

How compound interest works

Compound interest is the reason small, regular saving turns into a meaningful sum over time. Each time interest is paid, it’s added to your balance — so the next round of interest is calculated on a slightly bigger number. Over months and years that snowball effect does most of the heavy lifting, especially when you keep topping the pot up.

The maths behind it is the formula A = P(1 + r/n)nt, where P is your starting amount, r is the annual rate, n is how many times a year interest is applied, and t is the number of years. This calculator runs that month by month and layers your regular contributions on top, so the total you see reflects both your deposits and the interest they earn.

Simple vs compound interest

Simple interest only ever pays on your original deposit. Compound interest pays on your deposit plus all the interest already earned. On a £5,000 balance at 5%, simple interest pays £250 every year forever; compound interest pays £250 in year one, then more each year as the balance climbs. Over a decade the compound version pulls clearly ahead — and the longer you leave it, the wider the gap.

Tax on savings interest in the UK

Interest can be taxable once it passes your Personal Savings Allowance: £1,000 tax-free for basic-rate taxpayers, £500 for higher-rate, and none for additional-rate taxpayers. Anything above that is taxed at your income tax rate. Interest earned inside a cash ISA is always tax-free, up to the annual ISA allowance. Allowances change from time to time, so confirm the current figures on GOV.UK before making decisions — this tool is a guide, not financial advice.

How to use this calculator

  1. Pick a mode: “Grow my savings” to project a balance, or “Reach a goal” to find the monthly amount needed.
  2. Enter your starting amount and, in grow mode, how much you'll add each month.
  3. Set the annual interest rate (use the account's AER) and how many years you'll save for.
  4. Choose how often interest compounds — monthly is the most common for UK savings accounts.
  5. Read your projected balance, the interest earned, and the year-by-year table.

Frequently asked questions

What is compound interest?
Compound interest is interest earned on both your original money and on the interest it has already earned. Because each period's interest is added to the balance, your money grows faster over time than it would with simple interest — an effect often called 'interest on interest'.
How is compound interest calculated?
The standard formula is A = P(1 + r/n)^(nt), where P is your starting amount, r is the annual interest rate (as a decimal), n is how many times a year interest is compounded, and t is the number of years. When you add regular contributions, each deposit also compounds from the moment it's paid in — which is what this calculator works out for you.
Does compounding daily, monthly or yearly make much difference?
It makes a small difference. More frequent compounding earns slightly more because interest starts earning its own interest sooner. Over long periods and higher rates the gap widens, but for most UK savings accounts the headline AER already reflects the effect, so the difference between daily and monthly is usually minor.
Do I pay tax on savings interest in the UK?
Possibly. Most people get a Personal Savings Allowance — £1,000 of interest tax-free for basic-rate taxpayers and £500 for higher-rate taxpayers (additional-rate taxpayers get none). Interest above your allowance is taxed at your income tax rate. Money held in a cash ISA is tax-free regardless. Allowances can change, so check the current figures on GOV.UK.
Is compound interest better than simple interest?
For savers, yes — compound interest grows your balance faster because you earn interest on your accumulated interest, not just your original deposit. Simple interest only ever pays on the starting amount. The longer your time horizon, the bigger the advantage.
How much will £1,000 grow with compound interest?
£1,000 left for 10 years at 5% compounded monthly grows to roughly £1,647 with no further deposits. Add £200 a month and you'd have about £32,700 after 10 years — you'd have paid in £25,000, so roughly £7,700 of that is interest. Use the calculator above to model your own figures.

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