Savings Interest Calculator
Compound growth on a savings balance with regular monthly contributions, charted year by year.
What you're putting away
How it could grow
- Total contributed
- £35,000
- Interest earned
- £9,808
- Growth
- 28.0%
- You put in78%
- Interest earned22%
- Balance
- What you put in
Estimates only, based on published HMRC rates. Not financial advice.
Compound interest is interest earned on interest. Over short periods it's barely noticeable; over long ones it's the largest single factor in the outcome.
How to use it
- 1Enter your starting balance and monthly deposit.
- 2Set the interest rate and how many years you'll save for.
- 3Compare total contributions against interest earned on the chart.
How compounding works
Each period, interest is added to the balance, and the next period's interest is calculated on that larger balance. Regular monthly deposits accelerate the effect because every contribution starts earning immediately, and the earliest contributions have the longest time to grow.
This is why time matters more than amount. £100 a month started ten years earlier will usually finish ahead of £200 a month started late, at the same rate. The chart above makes the gap between what you put in and what you end up with visible.
AER, gross rate and real returns
AER shows what you'd earn over a year with compounding included, which makes it the right figure for comparing accounts. Gross rate is the rate before compounding and before tax. When an account advertises a bonus rate for twelve months, check what it reverts to afterwards, the headline figure is often temporary.
Then subtract inflation. A 4% return with 3% inflation is a real return of about 1%. Money in an account paying less than inflation is losing purchasing power even as the balance rises, which is the argument for not holding more cash than you need for emergencies and near-term plans.
Tax and protection
The Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of savings interest tax free each year and higher-rate taxpayers £500; additional-rate taxpayers get nothing. Interest inside a cash ISA is tax free regardless, which matters more as rates rise and ordinary accounts start breaching the allowance.
The Financial Services Compensation Scheme protects up to £85,000 per person per banking licence. Note the word licence: several high street brands share one, so spreading money across brands doesn't always spread the protection.
Common questions
- How does compound interest work?
- Interest is added to your balance, and future interest is then calculated on the larger balance. The effect grows over time, which is why starting earlier matters more than saving slightly more.
- What's the difference between AER and gross rate?
- AER includes the effect of compounding over a year and is the fair basis for comparison. Gross is the rate before compounding and before any tax.
- Do I pay tax on savings interest?
- Basic-rate taxpayers can earn £1,000 of interest tax free each year and higher-rate taxpayers £500. Additional-rate taxpayers have no allowance. Interest within a cash ISA is always tax free.
- Is my money safe in a savings account?
- Deposits are protected up to £85,000 per person per banking licence under the FSCS. Check licences rather than brands, since several brands can share one.
- Does this account for inflation?
- No, the projection is in nominal terms. Subtract expected inflation from the rate if you want to see growth in real purchasing power.