Compound Interest Calculator
Enter a starting amount, optional monthly contribution, annual interest rate and time period to see what your savings grow to — and how much of it is pure interest. Interest is compounded monthly, and each monthly contribution starts earning from the month it lands.
How it works
Compound interest pays interest on your interest: a balance grows by factor (1 + r/12) every month at annual rate r with monthly compounding. £10,000 at 5% becomes £16,470 in 10 years — £6,470 of it interest.
Regular contributions compound too: each monthly deposit starts earning from the month it lands. £200 a month at 5% for 10 years turns £24,000 of deposits into about £31,056.
A combined worked example: £5,000 to start plus £100 a month at 4% for 20 years. The lump sum grows by factor (1 + 0.04/12)²⁴⁰ ≈ 2.22 to about £11,100, and the 240 deposits of £100 grow to roughly £36,700 — a total near £47,800, of which £29,000 is money you paid in and about £18,800 is interest: more than three times the original lump sum.
Monthly compounding is slightly more generous than annual at the same quoted rate: 5% compounded monthly is an effective 5.12% a year, because each month's interest itself starts earning. The difference looks trivial in year one — about £12 on £10,000 — but it compounds like everything else over long horizons.
The result is a nominal projection: it assumes the rate stays constant for the whole period and does not model tax, account fees or inflation. Outside an ISA, interest above your Personal Savings Allowance is taxable (see the FAQ below), and real savings rates change over time — so treat long-horizon results as an illustration of the mechanics rather than a promise of the destination.
Time matters more than rate: money doubling takes about 72 ÷ rate years (the rule of 72). Starting ten years earlier routinely beats finding a slightly higher rate — which is the whole argument for starting now.
FAQ
How does compound interest actually work?
Each period's interest is added to the balance, and the next period's interest is calculated on that larger balance. At 5% compounded monthly, £10,000 earns £41.67 the first month, slightly more the second, and so on — reaching about £16,470 after 10 years without any further deposits.
What is the rule of 72?
A quick estimate of doubling time: divide 72 by the annual interest rate. At 6% your money doubles in roughly 12 years; at 4%, roughly 18. It is an approximation that works best for rates under about 15% and instantly shows why small rate differences compound into large gaps over decades.
Is interest on savings taxable in the UK?
Interest outside an ISA counts as income: basic-rate taxpayers get a £1,000 Personal Savings Allowance, higher-rate £500, additional-rate none. Inside a cash or stocks & shares ISA, interest and growth are entirely tax-free — one reason to use your ISA allowance first.
What will £10,000 grow to at 5%?
With monthly compounding and no further deposits: about £16,470 after 10 years and roughly £27,100 after 20. The second decade adds more than the first (£10,630 versus £6,470) because interest is being earned on a much larger balance — that acceleration is the whole point of compounding, and why years left untouched matter more than small differences in rate.
Does the calculator account for tax on interest?
No — it shows gross growth. Outside an ISA, interest counts as income above your Personal Savings Allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate. Inside a cash or stocks & shares ISA the entire result is tax-free, which is why using your ISA allowance first usually makes sense for larger balances.
Do monthly deposits earn a full year of interest?
Each deposit earns from the month it lands, so within any single year the January contribution earns nearly twelve months of interest while December's earns almost none. That is why £200 a month for 10 years (£24,000 paid in) grows to about £31,056 at 5% — less than a £24,000 lump sum invested on day one would reach, but far more than the same cash sitting uninvested.