Compound Interest Calculator

See how your savings grow over time with compound interest. Enter your starting amount, monthly contributions, and expected return to see a year-by-year breakdown.

Compound interest is the mechanism that turns modest, consistent saving into significant wealth over time. The Bank of England reports that UK households held £1.9 trillion in savings in 2025, yet many savers underestimate how dramatically compounding accelerates growth over longer time horizons.

The principle is simple: you earn interest not only on your original deposit but also on the interest already earned. Over five years the effect is modest, but over twenty or thirty years it becomes transformative. Regular monthly contributions amplify the effect further.

This calculator shows you a year-by-year breakdown of your savings growth, splitting out your contributions from the interest earned. Use it to compare different savings rates, contribution amounts, or investment horizons side by side.

How it works

  1. Enter your starting balance and monthly contribution amount.
  2. Set the annual interest rate and the number of years.
  3. View the total balance, total contributions, and total interest earned in a year-by-year table.

Written by the CalcStack team · Last updated April 2026

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Frequently asked questions

What is compound interest?▾
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, your money grows exponentially over time because you earn interest on your interest.
How does compound frequency affect my returns?▾
More frequent compounding (daily vs annually) produces slightly higher returns because interest is calculated and added to the principal more often. However, the difference between monthly and daily compounding is usually very small.
What is the rule of 72?▾
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate. For example, at 6% interest, your money doubles in approximately 72/6 = 12 years.
How much should I save monthly?▾
A common guideline is to save at least 20% of your after-tax income (the 50/30/20 rule). However, any amount invested consistently will benefit from compound interest over time.
What interest rate should I expect?▾
Cash savings accounts in the UK currently offer 3-5%. Stocks and shares ISAs have historically returned 7-10% annually over the long term, though with more volatility. The rate depends on your risk tolerance.
Does this calculator account for tax?▾
This calculator shows gross returns before tax. In the UK, you can shelter up to £20,000 per year in an ISA where growth is tax-free. Outside an ISA, you may owe tax on interest above your Personal Savings Allowance.
What is the Personal Savings Allowance?▾
Basic rate taxpayers can earn up to £1,000 in savings interest tax-free. Higher rate taxpayers get £500. Additional rate taxpayers get no allowance. ISA interest is always tax-free regardless.
Is compound interest better than simple interest?▾
Yes, over time compound interest produces significantly more growth than simple interest. The longer the time period and the higher the rate, the bigger the advantage of compound interest.
How does inflation affect compound interest?▾
Inflation reduces the real purchasing power of your returns. If your investment returns 7% but inflation is 3%, your real return is approximately 4%. Always consider inflation-adjusted returns for long-term planning.
Can I lose money with compound interest?▾
With savings accounts, your principal is protected (up to £85,000 per bank under FSCS). With investments like stocks, the value can go down as well as up — compound growth assumes a consistent positive return, which is not guaranteed.

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© 2026 CalcStack — a Flavoureak UK Ltd product. This calculator provides estimates only and is not financial advice.