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Compound interest calculator
Free · runs in your browser · updated 2026-07-05
How to use the compound interest calculator
- Enter a starting amountYour initial lump sum, or 0 if starting from scratch.
- Add a monthly contributionRegular deposits are where compounding really accelerates.
- Set rate and yearsUse your account's AER or an assumed investment return.
Frequently asked questions
What's the difference between AER and gross rate?
AER (Annual Equivalent Rate) shows what you'd actually earn in a year including compounding, so it's the right figure to compare accounts — and the right one to enter here.
How often is interest compounded?
This calculator compounds monthly, which matches most UK savings accounts. Annual compounding gives slightly lower results at the same quoted rate.
Is interest on savings taxable?
Basic-rate taxpayers get a £1,000 personal savings allowance (£500 higher-rate); interest above it is taxable. ISAs are tax-free, which is why they suit larger balances.
What return should I assume for investments?
Long-run global equity returns have historically averaged around 5–7% a year after inflation, but returns vary widely year to year and aren't guaranteed.
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