Compound Interest Calculator

With interest rates remaining relatively high compared to recent years, 2025 presents an excellent opportunity for UK savers to benefit from compound interest. This comprehensive guide examines the best savings accounts available in the UK market for maximising your returns through compounding, along with strategies to make the most of your savings. Understanding Compound Interest in UK Savings Accounts Compound interest means earning interest on both your original deposit and any accumulated interest. In the UK, most savings accounts compound interest either daily, monthly or annually, with the frequency significantly impacting your returns over time. Key factors for compound growth: AER (Annual Equivalent Rate): The effective interest rate including compounding Compounding frequency: How often interest is added to your balance Tax efficiency: Using ISA allowances to protect your r...

For UK savers and investors, understanding how often your interest compounds can make a significant difference to your long-term returns. While the interest rate gets most of the attention, the compounding frequency is equally important in determining how quickly your money grows. This guide examines daily, monthly and annual compounding to help you make informed decisions about your savings. How Compounding Frequency Works Compounding frequency refers to how often earned interest is added to your principal balance, thereby earning more interest (the "compound" effect). The more frequently this occurs, the faster your money grows. The general rule: More frequent compounding = better returns, all else being equal. The Mathematics Behind Compounding Frequencies The compound interest formula accounts for different compounding periods: A = P(1 + r/n) nt Where: ...

When it comes to growing your savings, understanding how interest works is crucial. The type of interest you earn can significantly impact how quickly your money grows over time. In this comprehensive guide, we'll explore the key differences between simple and compound interest, how they work, and which might be better for your financial goals. What is Simple Interest? Simple interest is the most straightforward way to calculate interest on a loan or investment. It's calculated only on the original principal amount throughout the entire term. The formula for simple interest is: Simple Interest = Principal × Interest Rate × Time Where: Principal is the initial amount of money Interest Rate is the annual interest rate (in decimal form) Time is the length of time the money is invested or borrowed (in years) Example of Simple Interest If you inv...

Understanding Compound Interest: A Simple Guide for UK Readers If you've ever heard the saying "money makes money," you're already halfway to understanding compound interest. This powerful financial concept can help your savings grow faster or make debts more expensive. In this guide, we'll explain compound interest in simple UK terms, show you how it works, and give you tips to make the most of it. What Exactly Is Compound Interest? Compound interest is the interest you earn on both your original money and on the interest that money has already earned. Unlike simple interest (where you only earn interest on the original amount), compound interest grows your money faster because you're earning "interest on interest." Simple Example: Imagine you put £1,000 in a savings account with 5% annual interest: Year 1: £1,000 + 5% = £1,050 Year 2...

Compound interest is one of the most powerful financial concepts you can use to grow your money over time. Whether you're saving for the future or paying off debt, understanding how compound interest works can help you make smarter financial decisions. In this guide, we'll explain: What compound interest is How it works (with simple examples) The difference between compound and simple interest How to make compound interest work for you Tips to maximise your savings Let's dive in! 1. What is Compound Interest? Compound interest is interest earned on both your original money (the principal) and the interest you've already accumulated. Unlike simple interest (which only grows based on the original amount), compound interest grows faster because your money earns interest on top of interest. ...