Compound Interest Calculator

A compound interest calculator shows how savings grow when the interest you earn starts earning interest of its own. Enter a starting amount, a regular monthly or yearly contribution, an interest rate, how often interest is compounded and how many years you will save. Our free calculator shows the final balance, how much of it is your money and how much is interest, the AER, how long your money takes to double, and a year-by-year table and chart. You can also raise your contributions each year and adjust for inflation to see what the pot might be worth in today's money. It all runs in your browser.

How to use the Compound interest

1. 1 Enter your starting amountType what you have saved already, or leave it at zero if you are starting from scratch.
2. 2 Add regular contributionsEnter how much you plan to add and choose a month or a year. Contributions are added at the end of each period.
3. 3 Set the rate, compounding and yearsEnter the annual interest rate or expected return, choose daily, monthly, quarterly or annual compounding, and set how many years you will save.
4. 4 Fine-tune if you want toRaise contributions by a percentage each year, for example with pay rises, and add an inflation rate to see the result in today's money.
5. 5 Read the chart and tableHover over the bars to see the split between what you paid in and the interest earned each year, then copy a summary or download the table.

What compound interest is

Simple interest is paid only on the money you put in. Compound interest is paid on your money plus the interest it has already earned. In the first year the difference is tiny, but over long periods it becomes the main source of growth. Save £5,000 at 5% a year compounded annually and you earn £250 in the first year. In the second year you earn interest on £5,250, so you get £262.50, and so on. After 20 years the pot would be about £13,266, of which more than £8,000 is interest.

The chart makes this visible. The green part of each bar is what you have paid in and the purple part is interest. In the early years the purple slice is thin. Later it grows faster and faster, because each year's interest is calculated on a bigger balance. That curve is why starting early, even with small amounts, usually beats starting later with larger ones.

Compounding frequency and AER

Compounding frequency is how often interest is added to the balance. The more often it is added, the sooner it starts earning interest of its own, so the same headline rate grows slightly faster with monthly or daily compounding than with annual compounding. At 5%, annual compounding gives an effective 5% a year, monthly gives about 5.12% and daily about 5.13%. The difference is real but small compared with the effect of the rate itself and the length of time.

To make accounts easy to compare, UK savings providers quote an AER, or annual equivalent rate. AER shows what the interest would be over a year if it were compounded and left in the account, whatever the actual frequency. The calculator works out the AER for the rate and frequency you choose. When comparing savings accounts, compare AERs, then check how often interest is paid and whether the rate is fixed or variable.

How the calculator works

The calculator works month by month. Each month the balance grows by the monthly equivalent of your rate at the compounding frequency you chose, and any monthly contribution is added at the end of the month. Yearly contributions are added at the end of each year. If you choose quarterly or annual compounding with monthly deposits, deposits made part-way through a period grow at the equivalent rate for the time they are held, which is a standard way to model it. Real accounts may pay nothing on money added part-way through a period until interest is next paid, so treat results as close estimates.

Contribution increases apply once a year: with a 3% increase, a £200 monthly contribution becomes £206 a month in year two, about £212 in year three and so on. Inflation adjustment divides each year's balance by the cumulative effect of inflation, so you can see what the pot might buy in today's prices. Switch between future pounds and today's pounds using the toggle above the results.

Why inflation matters

A pot that doubles over 20 years sounds impressive, but prices rise over the same period. If inflation averages 2.5% a year, something that costs £100 today would cost about £164 in 20 years. The real return on your savings is roughly the interest rate minus inflation, so 5% interest with 2.5% inflation grows your spending power by about 2.4% a year, not 5%.

Adding an inflation rate shows the real value of your money alongside the headline figure. It is especially useful for long-term goals such as retirement, a child's university costs or a house deposit, where the price of the goal is likely to rise too. If the rate on your savings is below inflation, your money is losing spending power even though the balance goes up.

Tax, ISAs and the rate you can really get

The results ignore tax and charges. Interest on ordinary savings accounts may be taxable once it goes over your personal savings allowance, while money in an ISA grows free of UK income tax and capital gains tax. According to GOV.UK, the most you can pay into ISAs in the 2026 to 2027 tax year is £20,000 in total across all your ISAs. If you enter contributions above that in a single year, the calculator shows a reminder.

Savings rates change over time, and fixed rates only last for the fixed term, so a single rate held for 20 or 30 years is a simplification. For investments such as stocks and shares, returns go up and down from year to year and can be negative, and past performance is not a guide to the future. Use a cautious rate for planning, and run the calculator at a few different rates to see a range of outcomes.

• Use the AER from the account you are considering for cash savings.
• For long-term investing, try a range of cautious return assumptions rather than one optimistic figure, and remember fund charges reduce returns.
• Check GOV.UK for the current ISA rules and allowances before you plan contributions.

The rule of 72 and the power of time

A quick way to estimate how long money takes to double is the rule of 72: divide 72 by the annual rate. At 6% a pot doubles in about 12 years, and at 4% in about 18 years. The calculator shows the exact doubling time from the AER, which will be very close to the rule of 72 for typical rates.

The rule works the other way too. If you want your money to double in ten years, you would need a return of roughly 7.2% a year. That is a useful reality check when a product promises fast growth, because higher returns almost always come with higher risk.

Time is the ingredient you cannot add later. Someone who saves £200 a month from 25 to 35 and then stops can end up with a similar pot at retirement to someone who saves the same amount from 35 to 65, depending on the rate, because the earlier money compounds for longer. Try it in the calculator with your own numbers. This tool is for illustration only and is not financial advice.

Examples you can copy

Starting amount     £5,000
Monthly saving      £200 (end of each month)
Rate                5% a year, compounded monthly
Time                20 years

Final balance       about £95,770
Total paid in       £53,000
Interest earned     about £42,770
AER                 about 5.12%

Lump sum:     A = P × (1 + r/k)^(k × t)
AER:          (1 + r/k)^k − 1
Monthly step: balance × (1 + r/k)^(k/12), then add the contribution
Real value:   balance ÷ (1 + inflation)^years

r = annual rate, k = compounding periods a year, t = years

Common mistakes to avoid

Frequently asked questions