Compound Interest Calculator UK

Use the compound interest calculator above

Type in your numbers and the tool does the rest. Start with what you have today, add what you can realistically put away each month, pick a sensible annual rate, and choose how many years you want to project. The result splits your final balance into the money you paid in and the interest earned on top, so you can see the effect of compounding at a glance.

How compound interest works

Compound interest is interest paid on your original money and on the interest already added. Simple interest only ever pays on the starting amount; compound interest pays on a balance that keeps getting bigger, so growth accelerates the longer you leave it. That snowball effect is why time in the market usually matters more than the exact rate.

The core formula for a lump sum is:

Final balance = P × (1 + r/n)^n×t

Where P is your starting amount, r is the annual interest rate as a decimal, n is the number of times interest is added per year (the compounding frequency), and t is the number of years. If interest compounds once a year, n is 1; monthly, n is 12.

Most people also pay in regularly, so the calculator adds a second part for your monthly deposits. Each deposit earns compound growth from the month it lands until the end of the term, which is why money paid in early is worth far more than money paid in near the finish line. In plain terms: balance each month = previous balance + monthly deposit, then multiply the whole lot by the monthly growth rate, and repeat for every month of the term.

Two settings change the answer a lot. The first is compounding frequency — monthly compounding beats annual compounding on the same headline rate, because interest is added and starts earning sooner. The second is the gap between the nominal rate (the advertised AER or interest rate) and the real return after inflation. A 4% return while prices rise 3% is closer to 1% in spending power, which is worth keeping in mind for long projections.

Worked example: Aisha saves £200 a month

Aisha is 30 and opens an account with £1,000. She sets up a £200 monthly standing order and assumes a 5% annual rate, compounded monthly, for 20 years.

• Monthly rate = 5% ÷ 12 = 0.4167%
• Number of months = 20 × 12 = 240
• The £1,000 lump sum grows to roughly £1,000 × (1 + 0.05/12)²⁴⁰ = about £2,712
• Her £200 monthly deposits add up to £48,000 paid in, and with monthly compounding they grow to roughly £82,200
• Projected total ≈ £84,900

Of that final figure, £49,000 is money Aisha actually paid in (£1,000 start plus £48,000 of deposits) and around £35,900 is interest. The interest alone is worth nearly three quarters of what she contributed — purely because she left it to compound for two decades.

Worked example: the cost of waiting five years

Now imagine Aisha waits until she is 35 to start, keeping everything else the same but with only 15 years to run. The £200 monthly deposits now total £36,000 paid in and grow to about £53,500, plus the lump sum at roughly £2,113, for a projected total near £55,600. Starting five years earlier added almost £29,000 to her pot for an extra £12,000 of deposits. That difference is compounding doing the heavy lifting, and it is the single strongest argument for starting sooner with whatever you can spare. You can compare this against a one-off pot using our savings calculator or model a fixed target with the savings goal calculator.

The Rule of 72: a quick mental check

To estimate how long money takes to double, divide 72 by the annual rate. At 6% a year, 72 ÷ 6 = 12 years to double; at 3%, it takes about 24 years. It is an approximation, not the exact maths, but it is a handy sanity check on any projection before you trust a calculator. If a forecast claims your money doubles far faster than the Rule of 72 suggests, the assumed rate is probably unrealistic.

Tax wrappers and your UK savings

Compound growth is most powerful when the taxman is not taking a slice each year. In the UK, an ISA shelters interest and investment growth from tax, and a pension adds tax relief on top of compounding. Outside a wrapper, savings interest may be covered by your Personal Savings Allowance, and you can check the position with our savings interest tax calculator. For a long-term retirement projection rather than a generic pot, the pension calculator applies the same compounding maths with contributions and tax relief built in.

The Money Advice arm of MoneyHelper has clear, impartial guidance on saving and the difference between AER and gross rates — see MoneyHelper's savings section. If you are weighing up an investment rather than cash savings, the FCA InvestSmart site explains risk and the fact that returns are never guaranteed.

Common mistakes to avoid

• Confusing AER with a flat rate. The advertised AER already accounts for compounding within the year, so do not compound it again on top or you will overstate growth.
• Assuming the rate is fixed forever. Easy-access savings rates move with the Bank of England base rate. A 5% rate today may not last 20 years, so test a lower figure too.
• Ignoring inflation. A pot that looks large in 20 years buys less than the same number does now. Run a real-terms version using our inflation calculator.
• Forgetting deposits stop when you do. The projection assumes you keep paying in every month; miss contributions and the final figure falls quickly.
• Treating investment returns as certain. Cash interest is contractual; stock-market returns are not. Use a conservative rate for anything that can fall in value.

These figures are estimates for guidance only and are not personal financial advice. Actual returns depend on the rate you get, how often it compounds, tax, and whether you keep contributing.

Related calculators

Plan the rest of your money with the regular savings calculator for monthly deposit accounts, the investment calculator for market-based projections, and the FIRE calculator if you are working towards financial independence.

The numbers: £1,000 left to compound

What £1,000 grows to with interest compounded yearly and no withdrawals. The pattern to notice: the growth in the second decade is bigger than the first, that is compounding working.

Remember tax: interest above your Personal Savings Allowance (£1,000 basic rate, £500 higher rate) is taxable. Check our savings interest tax calculator and GOV.UK guidance.