Compound Interest Calculator UK
Our free compound interest calculator shows you how your UK savings grow over time when interest is reinvested. Whether saving for retirement, a house deposit, or an emergency fund, see your money multiply with instant, real-time projections.
Estimated Balance
£0.00
Total Savings
£0.00
Total Interest
£0.00
How Compound Interest Grows Your UK Savings
This calculator uses the compound interest formula: A = P × (1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the compounding frequency per year, and t is the number of years. For savings with regular monthly contributions, each deposit is compounded separately. Inputs: initial deposit (£), monthly contribution, annual interest rate, and investment term. Outputs: final balance, total contributions, and total interest earned.
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is interest calculated on both the original principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the original sum), compound interest means your savings grow faster over time — often described as 'interest on interest'.
How often is interest compounded in UK savings accounts?
UK savings accounts typically compound interest either daily, monthly, or annually depending on the product. More frequent compounding leads to slightly higher returns. For example, £10,000 at 5% compounded monthly will earn slightly more than the same rate compounded annually over the same period.
What is the difference between AER and gross interest rate in the UK?
The AER (Annual Equivalent Rate) shows what you would earn if interest were compounded annually, allowing fair comparison between different savings accounts. The gross rate is the interest rate before tax. The net rate is the gross rate minus tax, though most UK savers now receive up to £500–£1,000 in tax-free savings interest via the Personal Savings Allowance.
How can I maximise compound interest on UK savings?
To maximise compound interest, start saving as early as possible, reinvest all interest rather than withdrawing it, look for accounts with more frequent compounding, and consider ISAs where interest is fully tax-free. Even small monthly contributions make a significant difference over a 10–20 year period.
Is compound interest relevant for UK debt?
Yes — compound interest works against you on debts such as credit cards. UK credit cards typically charge around 20–30% APR, and if you only make minimum payments, the balance can grow quickly. Understanding compound interest is crucial for managing and paying down UK debt effectively.