Compound Interest Calculator UK
Project how a lump sum and regular monthly contributions could grow with compound interest. Enter a starting amount, rate and term, and choose how often interest compounds to see a year-by-year balance.
This is a nominal annual rate, not a guaranteed return.
| Year | Contributions | Interest to date | Balance |
|---|---|---|---|
| 1 | £10,000.00 | £500.00 | £10,500.00 |
| 2 | £10,000.00 | £1,025.00 | £11,025.00 |
| 3 | £10,000.00 | £1,576.25 | £11,576.25 |
| 4 | £10,000.00 | £2,155.06 | £12,155.06 |
| 5 | £10,000.00 | £2,762.82 | £12,762.82 |
| 6 | £10,000.00 | £3,400.96 | £13,400.96 |
| 7 | £10,000.00 | £4,071.00 | £14,071.00 |
| 8 | £10,000.00 | £4,774.55 | £14,774.55 |
| 9 | £10,000.00 | £5,513.28 | £15,513.28 |
| 10 | £10,000.00 | £6,288.95 | £16,288.95 |
How it works
Compound interest is what makes long-term saving so powerful. Rather than only earning interest on your original deposit, you earn interest on the interest already added — and then interest on that, and so on. Over a decade or two the effect is significant. This is a maths projection, not a promise: it does not imply any particular return is guaranteed.
The classic formula for a lump sum with no contributions is FV = P × (1 + r/n)^(n × t), where P is the principal, r the annual rate, n the number of compounding periods per year and t the number of years. £10,000 invested for 10 years at 5% compounded annually grows to £16,288.95.
Adding regular monthly contributions increases the result further, as each month's deposit starts compounding from the moment it's added. Compounding frequency also matters: a quoted nominal rate compounded monthly produces a slightly higher effective annual rate (AER) than the same nominal rate compounded once a year, because interest is added to the balance sooner and starts earning its own interest earlier. Savings products usually quote AER precisely so you can compare different compounding frequencies on a like-for-like basis.
Two caveats. First, inflation quietly erodes real returns; a 5% nominal return during 3% inflation is closer to 2% in today's money. Second, most non-ISA savings interest is taxable beyond the personal savings allowance, and investment returns may carry platform or fund fees. None of tax, inflation or fees are included here — adjust the rate downwards to reflect them for a more realistic projection.
Worked example
£10,000 invested with no further contributions, at a 5% annual rate compounded annually for 10 years, grows to £16,288.95 — total interest of £6,288.95 on top of the original £10,000. Switching to monthly compounding at the same 5% nominal rate produces a very slightly higher balance, because interest starts earning its own interest a little sooner each year.
Limitations of this calculator
- Assumes one constant interest rate for the whole term — real rates change over time.
- Does not imply any return is guaranteed; it is a maths projection, not a forecast.
- Excludes inflation, tax on interest above your personal savings allowance, and investment or platform fees.
- Assumes contributions continue at the same fixed monthly amount for the entire term.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on your interest as well as on your original capital. Over long horizons it can more than double the returns of simple (non-compounding) interest.
How does compounding frequency affect the result?
The more frequently interest is compounded — monthly rather than annually, for example — the higher the effective annual return (the 'AER') even if the nominal rate quoted is identical. The difference is small at low rates but grows over long horizons.
Does this account for tax on savings interest?
No. UK basic-rate taxpayers get a £1,000 personal savings allowance and higher-rate taxpayers £500. Interest in an ISA is entirely tax-free. Adjust the rate down if you expect to pay tax on the interest.
Is a projected return guaranteed?
No. This calculator simply projects a fixed rate forward — it is a maths tool, not a forecast or guarantee. Real savings and investment returns vary, and past performance never guarantees future results.
What if I stop contributing partway through?
This calculator assumes contributions continue at the same monthly amount for the full term. Setting the contribution to zero shows the pure growth of the initial principal.
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Official sources
Figures on this page follow official UK government guidance. Rates last verified: 27 August 2026. See our data sources and calculation methodology.
Estimates for general guidance only — not personalised financial advice.