See how your money grows with compound interest
Total Balance after 5 years
Total Deposited
£13,000
Total Interest
+£1,892
Albert Einstein reputedly called compound interest the "eighth wonder of the world," saying, "He who understands it, earns it... he who doesn't... pays it." But what actually is it?
In simple terms, compound interest is interest on interest.
When you put money in a standard savings account, the bank pays you interest. If you leave that interest in the account, the next month the bank pays you interest on your original deposit plus the interest you just earned. Over time, this snowball effect can be massive.
Let's say you invest £10,000 at 5% interest.
The most important factor in compound interest isn't the amount of money—it's time. A small amount saved in your 20s can grow larger than a large amount saved in your 40s, simply because it has more time to compound.
💡 Pro Tip: Use this calculator to see how increasing your monthly contribution by just £50 can dramatically change your outcome over 10+ years.
Using the SavingsAI Savings Goal Calculator is straightforward. Start by entering your initial deposit — the lump sum you have available today, even if it is zero. Next, enter your monthly contribution, which is the amount you plan to add every month. Then set the annual interest rate; if you are unsure, check our live rate comparison table to find the current best rates from UK banks. Finally, choose your time horizon in years — this is how long you intend to leave your savings untouched.
The calculator will instantly show your projected final balance and the total interest earned. Try adjusting the monthly contribution slider to see how even small increases — say, an extra £25 per month — can significantly boost your outcome over five or ten years. This is the compound effect in action: your interest earns interest, snowballing over time.
Use the chart to visualise your growth trajectory. A steeper curve towards the end of the timeline is normal and reflects compounding accelerating as your balance grows larger. If your curve is nearly flat, it usually means the time horizon is too short or the interest rate is very low — consider switching to a fixed-rate account for a longer term.
Compound interest is often called the eighth wonder of the world, and the maths bears this out. Consider two UK savers, both starting today:
The difference is entirely down to the five years of compounding that Saver A's money enjoyed before Saver B even began. In practical terms, starting today — even with a small amount — beats waiting until you have a larger sum. Compound interest rewards patience and consistency above all else.
In the UK, interest is typically calculated daily and credited monthly or annually depending on the account. Accounts that compound monthly will grow slightly faster than those that compound annually at the same headline rate. When comparing accounts, always check whether the rate is AER (Annual Equivalent Rate) — this standardised figure accounts for compounding frequency and makes accounts directly comparable.
A common question is whether it is better to save a lump sum upfront or make regular monthly contributions. The answer depends on your circumstances, but both strategies benefit enormously from starting early.
Monthly contributions suit most people because they align with a salary cycle and build the habit of saving automatically. Setting up a standing order to a savings account on payday removes the temptation to spend first and save what is left. Even £50 per month grows meaningfully over a decade at today's UK rates.
Lump sum deposits make sense when you receive a windfall — a bonus, inheritance, or tax refund. Depositing the full amount immediately ensures every pound starts compounding from day one. For lump sums above £10,000, it is worth splitting across multiple banks to stay within the FSCS £120,000 protection limit per institution.
A blended approach — a lump sum to open the account plus regular monthly top-ups — is often optimal. Use the calculator above to model both scenarios with your own numbers. You may be surprised how much difference front-loading even a modest initial deposit makes to your final balance.
The interest rate you enter into this calculator makes a significant difference to your outcome — so choosing the right account type is just as important as how much you save. UK savers currently have access to several distinct account structures:
Once you have a target figure from this calculator, visit our live rate comparison tool to find the best current account for your timeline. Rates change daily, and moving from the average high-street rate to the best available rate can add hundreds of pounds to your final balance over five years.