Savings and compound interest calculator

Estimate how a starting balance and monthly deposits could grow. Enter an annual rate and choose compound or simple interest. Read the rate hint if your account quotes AER.

After 10 years

£16,215.81

£13,000.00 paid in and £3,215.81 interest

Your details

Starting amount

Added each month

Annual interest rate (%) For an advertised AER, choose Yearly below. For a gross annual rate, choose how often interest compounds. %

Years

Interest added

Type

At a glance
Figure	Amount
Final balance	£16,215.81
Total paid in	£13,000.00
Interest earned	£3,215.81
AER	4.07%

How this was worked out

Total paid in: £1,000.00 + (£100.00 × 12 × 10) = £13,000.00
Monthly factor: (1 + 0.04 ÷ 12)^(12 ÷ 12) = 1.0033333
AER: ((1 + 0.04 ÷ 12)^12 − 1) × 100 = 4.07%
Interest earned: £16,215.81 − £13,000.00 = £3,215.81

Year by year

Year by year
Year	Paid in	Interest	Balance
1	£2,200.00	£62.99	£2,262.99
2	£1,200.00	£114.44	£3,577.43
3	£1,200.00	£168.00	£4,945.43
4	£1,200.00	£223.73	£6,369.16
5	£1,200.00	£281.74	£7,850.89
6	£1,200.00	£342.10	£9,393.00
7	£1,200.00	£404.93	£10,997.93
8	£1,200.00	£470.32	£12,668.25
9	£1,200.00	£538.37	£14,406.62
10	£1,200.00	£609.19	£16,215.81

Was this right and useful?

Should I enter AER or a gross interest rate?

AER means annual equivalent rate. It includes the effect of interest earning interest during a year. A gross annual rate is the rate before that compounding effect and before tax. The same number can give different results depending on which rate it represents.

For an advertised AER, enter that rate and choose Yearly under "Interest added", with Compound interest selected. The calculator then uses the AER as the annual growth rate and spreads that growth evenly over the months. This setting models the growth rate; it does not set your bank's payment dates.

For a gross annual rate, choose how often interest compounds: monthly, yearly or daily. A bank may calculate interest daily but pay it monthly. Check its account terms rather than assuming those are the same thing. The UK Finance explanation of AER sets out how annual rates account for compounding.

A savings interest example

Start with £1,000.00, add nothing and use 4% AER for one year. Enter that rate with Yearly and Compound interest selected. The estimated balance is £1,040.00, including £40.00 of interest before tax.

A 4% gross annual rate compounded monthly gives £1,040.74 from the same starting amount over one year. Its calculated AER is 4.07%. These are two different rate assumptions, with no deposits or withdrawals.

If you start with £1,000.00 and add £100.00 at the end of each month for one year at 4% AER, the estimate is £2,261.84. You pay in £2,200.00 and earn £61.84 of interest before tax. Later deposits earn interest for less time than the starting balance.

What the calculator assumes

The annual rate stays fixed for the whole estimate.
You add the same amount at the end of every month and make no withdrawals.
Compound interest stays in the balance. The daily option uses the same number of compounding periods each year, so actual account dates can differ.
No tax, fees, changing bonus rates or deposit limits are included.
Balances use unrounded interest during the calculation and round displayed amounts to pennies. They are not adjusted for inflation.

Compound and simple interest

Compound interest earns interest on both your deposits and the interest already added. Simple interest earns interest only on your deposits. In the simple-interest estimate, earlier deposits earn interest for more months, but that interest earns no further interest.

The AER row expresses the annual growth rate implied by the selected compounding frequency. It describes the compound-interest rate. Selecting Simple interest does not give interest on earlier interest. MoneyHelper explains compound interest with annual examples.

Choose the calculation you need

The savings challenge calculator sets out daily or weekly saving challenges. The house deposit calculator includes property tax in a home-buying target.

To compare borrowing repayments and extra monthly payments, use the loan repayment and overpayment calculator. To examine rising prices separately, use the inflation calculator with past years as a guide.

Tax on savings interest

The ISA allowance page explains the shared annual limit and how paying in or taking money out affects what you can add.

This result is before tax. Your tax treatment depends on your income and how you hold the savings. GOV.UK explains tax on savings interest and Individual Savings Accounts. The calculator does not decide your tax bill.

Report a mistake

Spotted a mistake?

Use the report form. Tell us what you entered and what you expected to see. Fixed errors are listed on the corrections page.

To work backwards from a target and deadline, use the savings goal calculator. It plans deposits from today and leaves out interest.