Compound interest calculator
United Kingdom · 2026/27 tax yearSee how much your savings could grow when interest is added to your balance and then earns interest itself. Add a regular monthly amount to see the effect of saving consistently.
Year-by-year growth
| Year | Paid in | Interest | Balance |
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What is compound interest?
Compound interest means you earn interest on your interest. Each time interest is added, your balance grows, so the next interest payment is calculated on a bigger amount. Over long periods this snowball effect can make a big difference.
Example
Saving £100 a month on top of £1,000, at 4% a year added monthly, grows to about £16,200 after 10 years. You would have paid in £13,000, so about £3,200 is interest. Leave it for 25 years and the balance reaches about £54,100, with more than £23,000 of that from interest.
Tips for making your savings grow
- Start early: time is the most powerful part of compounding.
- Check the AER (Annual Equivalent Rate) when comparing savings accounts, because it shows the effect of compounding.
- Consider a cash ISA or stocks and shares ISA, so your interest or growth is tax-free. You can pay in up to £20,000 a year.
Frequently asked questions
What is the difference between AER and the interest rate?
AER shows what you would earn in a year once compounding is included. If interest is added monthly, the AER is slightly higher than the headline gross rate.
Is interest on savings taxed?
Most people can earn some interest tax-free through the Personal Savings Allowance: £1,000 a year for basic-rate taxpayers and £500 for higher-rate taxpayers. Interest in an ISA is always tax-free.
For illustration only. Real returns depend on the rates you get, and investments can go down as well as up.
Last checked and updated: October 2026