What it does
This calculator projects how a savings pot grows when interest compounds — that is, when each round of interest is added to the balance so it goes on to earn interest of its own. Enter a starting amount, an optional monthly contribution, an annual interest rate, a number of years and how often interest is added, and it shows the final balance along with how much of that is your own money and how much is interest.
How it works
Compounding means interest is calculated on the running balance, not just the original deposit. The future value of a one-off deposit, plus a stream of regular contributions added at the end of each compounding period, is:
Here i is the interest rate per period — the annual rate divided by 100 and then by the number of periods per year — and N is the total number of periods, the frequency multiplied by the number of years. The contribution figure is the amount added in each period: a monthly contribution is converted with contribution = monthlyContribution × 12 ÷ frequency, so the same monthly figure still works whether interest compounds monthly or annually. When the rate is 0%, the contribution part simplifies to contribution × N — the balance is just everything you paid in.
Worked example
Put £1,000 away at 5% a year, compounded once a year, with no further contributions, and leave it for 10 years. Each year the balance is multiplied by 1.05, so after 10 years it is 1,000 × 1.0510 = £1,628.89. Of that, £628.89 is interest earned on top of your original deposit — and most of it comes from the later years, once interest is itself earning interest.
Common uses
- Savings accounts and ISAs: estimating where a regular monthly deposit could grow to over several years.
- Pension and investment projections: seeing the long-run effect of leaving money invested rather than withdrawing the gains.
- Comparing accounts: understanding why a rate compounded monthly beats the same rate compounded annually.
- Goal planning: working backwards from a target by trying different starting amounts, contributions and timescales.
Frequently asked
What is the difference between simple and compound interest?
Simple interest is paid only on the original amount, so it adds the same figure every year. Compound interest is paid on the running balance, so each year's interest is slightly larger than the last. Over long periods the gap between the two becomes substantial — that snowball effect is the whole point of compounding.
How often is interest compounded?
It depends on the account. Many UK savings accounts add interest annually, some monthly, and a few daily. The more often interest is added, the more often it starts earning interest itself, so a higher compounding frequency produces a slightly larger balance for the same headline rate. This tool lets you compare annual and monthly compounding directly.
Does this account for tax, inflation or fees?
No. The result is an estimate that assumes a single fixed interest rate for the whole period and ignores tax, inflation, charges and any change in your contributions. Real returns vary, so treat the figure as a guide rather than a promise.
Where can I read more?
MoneyHelper, the government-backed service, has a plain-English explainer on the benefits of compound interest. You can also read how we build and verify our tools.