Compound Interest Calculator

Compound interest is interest calculated on both your initial deposit and the interest you've already earned. Unlike simple interest — which only accrues on your principal — compound interest means your money grows exponentially over time, often described as "interest on interest".

The formula is: A = P × (1 + r/n)^(n×t)

Where A is the final amount, P is your principal (starting balance), r is the annual interest rate as a decimal, n is how many times interest compounds per year, and t is the number of years. For example, £1,000 at 5% compounded monthly for 10 years: A = 1,000 × (1 + 0.05/12)^(12×10) = £1,647.

Each year you earn interest on your balance, and that interest is added to the balance, so next year's interest is a little bigger. Take £10,000 at 5% compounded yearly:

Year 1: £10,000 earns £500, giving £10,500. Year 2: £10,500 earns £525, giving £11,025. Year 3: £11,025 earns £551.25, giving £11,576.25.

The yearly interest keeps growing. By year 10 the balance is £16,288.95, and that year alone earns £775.66. By year 30 it is £43,219.42, with £2,058.07 earned in the final year — four times the first year's interest from the same starting deposit. Open the Table view in this calculator to see this breakdown for your own numbers.

With interest compounded monthly and no further deposits, £10,000 left for 10 years grows to:

At 3%: £13,494 At 5%: £16,470 At 7%: £20,097

The rate makes a big difference over time — moving from 3% to 7% adds over £6,600 on the same deposit. These figures are before tax, fees and inflation. Enter your own amount, rate and timeframe above to see your exact result.

Every contribution starts compounding from the day it is added, so regular saving builds much faster than the deposits alone. The future value of regular contributions is: FV = PMT × ((1 + r/n)^(n×t) − 1) ÷ (r/n)

Where PMT is the amount you pay in each period, r is the annual interest rate as a decimal, n is the number of periods per year and t is the number of years.

For example, £200 a month at 7% compounded monthly for 30 years grows to about £243,994. You pay in £72,000, so roughly £172,000 of the final pot is interest. Add your contributions in the "Additional contributions" field to include them in your result.

Yes — debt compounds too. If you owe £1,000 on a credit card charging 24.9% APR, compounded monthly, and make no payments, the balance grows to about £1,279 after one year and £3,429 after five years.

This is why paying off high-interest debt is often the best "return" available: clearing a 24.9% card balance saves more than most investments are likely to earn. Pay it off before focusing on savings and investments.

Simple interest is calculated only on your original investment. Compound interest is calculated on your principal plus any accumulated interest. Over long periods, the difference is dramatic: £10,000 at 7% simple interest for 30 years grows to £31,000, but with annual compounding it reaches £76,000 — more than twice as much.

Inflation gradually reduces the real purchasing power of money. If inflation runs at 2.5%, a pot of £100,000 in 10 years will only buy what £78,000 buys today. Use the "Adjust for inflation" toggle to see the real value of your future pot in today's pounds — it's the most honest way to plan for retirement or long-term goals.

The S&P 500 has historically returned around 10% annually (roughly 7% after inflation). For UK-focused investors, the FTSE All-World has averaged 7–9% historically. A conservative estimate for long-term planning is 5–7% per year. Always account for platform fees (typically 0.15–0.45%) and inflation when setting your expectations.

Interest and investment returns are generally taxable in the UK. However, using a Stocks & Shares ISA or Cash ISA shelters up to £20,000 per year (2026/27 allowance) completely from tax. Growth, dividends, and withdrawals inside an ISA are all tax-free, making ISAs the most powerful tool available to UK savers and investors.

The more frequently interest compounds, the faster your money grows. Daily compounding produces slightly more than monthly, which beats annual. In practice, the difference between daily and monthly compounding is small — on £10,000 at 5% over 10 years, daily compounding adds only about £17 more than monthly. The interest rate itself matters far more than compounding frequency.

The Rule of 72 is a quick mental shortcut to estimate how long it takes to double your money. Divide 72 by your annual interest rate: at 6%, your money doubles in roughly 12 years (72 ÷ 6). At 9%, it doubles in 8 years. It's a useful sanity check when planning long-term investments, though our calculator gives you the precise figure.

Work backwards: decide your target amount and timeline, then adjust the monthly contribution in this calculator until the future value matches your goal. As a rough guide, saving £200/month at 7% for 30 years produces around £244,000. Starting earlier has an outsized impact — the same £200/month started 10 years earlier, over 40 years, produces around £525,000, more than double.

Stocks & Shares ISAs offer the highest long-term compound growth potential, with historical returns of 7–10% annually. Cash ISAs and high-interest savings accounts offer lower but guaranteed rates, currently 4–5% (2024/25). For maximum compounding, reinvest all dividends and interest, minimise fees, and shelter as much as possible inside an ISA to avoid tax eroding your returns.

Your balance grows by the interest rate divided by the number of compounding periods (12 for monthly), once each period. Regular contributions are added at the end of each period, or the start if you choose. Over time this follows the standard compound interest formula, A = P × (1 + r/n)^(n×t), plus the growth on each contribution from the day it is added.

Annual fees are charged a little each period on the whole balance. Tax, if you set it, is taken once a year on interest above your tax-free amount. With "Adjust for inflation" on, results are shown in today's money: each year's balance is divided by the rise in prices since you started.

It assumes the same rate every year. Real savings rates change and investments go up and down, so treat results as an illustration rather than a forecast. It doesn't account for charges or bonuses specific to your account.