Compound Interest Calculator — Savings Growth Over Time

Initial Investment

Annual Interest Rate

Investment Period

yrs

Monthly Contribution

Compounding Frequency

After — years

—

Total value

—

Total Deposited

—

Interest Earned

—

Years to Double (Rule of 72)

—

Effective Annual Rate (APY)

About the Compound Interest Calculator

Albert Einstein reportedly called compound interest the "eighth wonder of the world." The concept is simple: you earn returns not just on your original investment, but also on every pound of interest you have previously earned. Over long periods, this creates dramatically accelerating growth.

Compound interest formula

A = P × (1 + r/n)^(n×t), where P = principal, r = annual rate, n = compounding frequency, t = time in years. For monthly contributions, an additional annuity term is added.

The power of starting early

Investing $10,000 at 7% annual return for 30 years produces approximately $76,000. The same investment for 40 years produces approximately $150,000. The extra 10 years nearly doubles the outcome — this is compounding at work.

Compound interest in savings vs debt

Compound interest works for you in savings and investments, and against you in debt. A credit card at 20% APR compounds monthly — a £1,000 balance unpaid for 12 months grows to approximately £1,219. The same principle that makes long-term investing powerful makes high-interest debt dangerous.

ISAs and pensions — tax-free compounding over decades produces dramatic results
Credit card debt — minimum payments barely cover interest; the balance grows despite regular payments
Inflation — money in a 0% savings account compounds in reverse; purchasing power erodes
Reinvested dividends — the most powerful form of compounding in equity investing

Frequently Asked Questions

What is compound interest?

Compound interest means you earn interest on both your principal and the interest already accumulated. This creates exponential growth — the longer you invest, the faster your money grows.

How often is interest compounded?

Common compounding frequencies are daily, monthly, quarterly, and annually. More frequent compounding produces slightly higher returns. Most savings accounts compound monthly or daily.

What is the Rule of 72?

The Rule of 72 is a shortcut to estimate how long it takes to double your money. Divide 72 by the annual interest rate. At 6% interest, your money doubles in roughly 72 ÷ 6 = 12 years.

What is the difference between APR and APY?

APR is the stated interest rate before compounding. APY accounts for compounding and represents the effective annual rate you actually earn. Our calculator shows both.

What is the difference between compound and simple interest?

Simple interest is calculated only on the original principal: £1,000 at 5% for 3 years = £150 total interest. Compound interest is calculated on the principal plus accumulated interest: £1,000 at 5% for 3 years = £157.63. The longer the term, the greater the difference. For savings, you want compound interest; for loans, you pay it.

How often should interest compound for maximum growth?

More frequent compounding produces slightly more growth: monthly compounding gives more than annual compounding at the same nominal rate. The difference is modest in practice. £10,000 at 5% compounded annually for 10 years = £16,288; monthly compounding = £16,470. Continuous compounding (the mathematical limit) gives £16,487.