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Compound Interest Calculator

A = P × (1 + r/n)^(n×t)

Principal Amount

Compounding Frequency

Annual Interest Rate

Time Period (years)

10y

Total Interest

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Final Balance

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Growth Factor

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Year-by-year growth

Year	Opening Balance	Interest Earned	Closing Balance

Compound vs Simple interest

Simple interest total—

Compound interest total—

Extra earned by compounding—

The compound interest formula explained

Compound interest works by adding earned interest back to the principal, so each subsequent period earns interest on a larger amount. The more frequently it compounds, the faster the growth.

A = P × (1 + r/n)^(n×t)

P = Principal · r = Annual rate (decimal) · n = Compounds per year · t = Years

Example: £10,000 at 7% compounded monthly for 10 years.
A = 10,000 × (1 + 0.07/12)^(12×10) = £20,097
Simple interest would give only £17,000 — compounding earns £3,097 more.

Compounding frequency matters

At the same stated annual rate, more frequent compounding always earns more. The difference between annual and daily compounding is small but meaningful over long periods. Here's why: monthly compounding means your interest starts earning its own interest 30 days sooner than annual compounding would allow.

When comparing savings accounts, always use the AER (Annual Equivalent Rate) — it normalises compounding frequency so you can compare products fairly.

💡Pro Tip

The Rule of 72

Divide 72 by your interest rate to find how many years it takes to double your money.

6%→12 years to double

8%→9 years to double

10%→7.2 years to double

Other Calculators

💰Simple Interest→ 🏦Savings Growth→ 🏠Loan Interest→

Compound Interest — FAQ

Use whatever matches your actual account. Most UK savings accounts compound monthly or annually. ISAs typically compound annually. If you don't know, monthly is a reasonable assumption and gives a slightly conservative estimate compared to daily compounding.

Because your interest earns interest. In year 1, the difference is tiny. But over 20–30 years, the compounding effect becomes enormous. This is why pension contributions made in your 20s are worth far more than the same contributions made in your 40s.

Yes — compound interest works against borrowers just as powerfully as it works for savers. Credit cards compound daily, which is why carrying a balance is so expensive. When borrowing, you want simple interest or the shortest possible term.

The EAR is the true annual rate after accounting for compounding within the year. It's higher than the nominal rate for any frequency more than once per year. This is what the AER (Annual Equivalent Rate) shown on UK savings accounts represents.