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Interest calculator

Estimate simple or compound interest on savings and regular contributions.

Initial balance

Monthly contribution

Interest rate

Term

Compounding

Estimate only. It does not account for tax, changing interest rates, withdrawals or provider-specific terms.

Estimated final balance

£0

Total contributions£0
Interest earned£0
Compounding methodMonthly

What your result means

Explore how an opening balance and regular monthly savings might grow. The three methods make different assumptions, so choose the method as carefully as the rate.

Compare scenarios by changing one input at a time. The glossary explains the technical words used on this page.

Estimated final balance: Opening savings, future contributions and calculated interest combined.
Total contributions: The opening balance plus all the monthly amounts added. It includes money already saved, not just new contributions.
Interest earned: Final balance minus total contributions, before any tax or charges.
Compounding method: Monthly, Annual equivalent or Simple interest, reflecting the method selected.

The “Annually” option does not wait until year-end to add interest. It converts an annual effective rate to an equivalent monthly rate and applies growth monthly, as described below.

Methodology: how the calculation works

The monthly and annual-equivalent methods grow the balance month by month and add each contribution at the end of the month. Simple interest uses a separate average-time approximation.

Convert the term into months and add up the opening balance plus all monthly contributions.
For Monthly, divide the annual percentage by 100 and 12. Each month, grow the current balance at that rate, then add the contribution.
For Annually, calculate the monthly rate that compounds to the entered annual effective rate over 12 months. Grow the balance monthly, then add each contribution.
For Simple interest, charge no interest on interest. Estimate interest on the opening balance for the full period and on future contributions for half the period on average.

See the calculation formula

Compound: next balance = balance × (1 + r) + C
Simple: interest = (P + C × n ÷ 2) × a × years

P is the opening balance, C is the monthly contribution, n is months and a is the annual percentage divided by 100. In Monthly mode r = a ÷ 12. In Annually mode r = (1 + a)^(1/12) − 1, the monthly rate giving the same annual growth. Simple mode’s half-period assumption is approximate, not an exact payment-date schedule.

The assumptions behind your estimate

The rate and contribution remain constant; no withdrawals, tax, fees or inflation adjustment are applied. The default rate is illustrative, not a savings offer.
Compound-mode contributions arrive at each month-end. The first contribution therefore does not earn interest during the first month.
The same numeric rate does not mean the same annual return in both compound modes. Monthly treats it as a nominal rate; Annually treats it as an annual effective rate.
Displayed cash values are rounded to whole pounds. Total contributions includes the opening balance. Use valid non-negative inputs and a rate appropriate to the selected method.

Two simple worked examples

Start with £5,000 at an annual input of 4.5% over five years using Monthly mode. Compare leaving it alone with adding £250 at the end of every month.

Worked example

No monthly additions

£5,000 opening balance · £0 monthly · 4.5% annual input · 5 years · monthly method

£6,259

estimated final balance

Total contributions: £5,000
Interest earned: £1,259
Compounding method: Monthly

Worked example

Add £250 each month

£5,000 opening balance · £250 monthly · 4.5% annual input · 5 years · monthly method

£23,045

estimated final balance

Total contributions: £20,000
Interest earned: £3,045
Compounding method: Monthly

A closer look: what the method changes

All four scenarios start with £5,000. A, B and C add £250 monthly for five years at a 4.5% annual input. D changes only the contribution from A to £350.

On a small screen, swipe the table sideways to see every figure.

Interest: illustrative scenarios
Scenario	Inputs and assumptions	Estimated final balance	Total contributions	Interest earned	Compounding method
A · Monthly method	£5,000 opening balance · £250 monthly · 4.5% annual input · 5 years · monthly method	£23,045	£20,000	£3,045	Monthly
B · Annual equivalent	£5,000 opening balance · £250 monthly · 4.5% annual input · 5 years · annual-equivalent method	£22,979	£20,000	£2,979	Annual equivalent
C · Simple approximation	£5,000 opening balance · £250 monthly · 4.5% annual input · 5 years · simple method	£22,813	£20,000	£2,813	Simple interest
D · £350 monthly	£5,000 opening balance · £350 monthly · 4.5% annual input · 5 years · monthly method	£29,760	£26,000	£3,760	Monthly

A and B differ because the same number is interpreted differently, not because one account is necessarily better. C does not earn interest on earlier interest. D’s extra balance comes partly from putting in more of your own money; compare the contributions and interest separately.

Examples use the stated assumptions and the existing calculator’s rounding. They are illustrations, not product offers, personalised recommendations or guarantees.

What the estimate does not include

Tax on savings interest, account fees, bonus-rate expiry and changes to provider terms.
Withdrawals, changing contributions and interest calculated on specific daily balances or paid on different dates.
Inflation and the purchasing power of the future balance. Simple mode is not an exact account statement calculation.

Interest glossary: the words explained

Plain-English definitions of the finance, calculation and technical terms used on this page. Dotted links take you directly to the relevant definition.

AER / annual equivalent rate: A savings rate expressing growth over a year including compounding. The Annually mode here converts an annual effective rate into an equivalent monthly rate.
Annual / monthly rate: Annual means per year; monthly means per month. A monthly rate is not interchangeable with an annual rate. The methodology explains this tool’s conversion.
Annual effective rate: The percentage growth over one year after compounding. Here Annually mode works backwards to a monthly rate that produces that annual growth.
Balance / outstanding balance: The money held in an account, or the amount still owed on a loan, at a given time.
Bonus rate: An additional rate that may apply for a limited period or subject to conditions. The tool does not model its expiry.
Broker / credit broker / broker fee: A business that introduces customers to finance providers or helps arrange finance, rather than lending the money itself. A broker fee is a charge for that service.
Compounding / compound interest: Adding interest or investment growth to a balance so that it can itself earn interest or growth in later periods.
Contribution / total contributions: Money added to savings or a pension. In this tool total contributions includes the opening balance as well as future payments, not just new money.
Credit / finance / borrowing: Money made available to borrow and repay later, usually with interest or charges.
Estimate / illustration / projection: A result based on stated inputs and assumptions, not a promise of what will happen or a provider’s offer.
Financial Conduct Authority (FCA) / authorised and regulated: The UK financial-services regulator named in the site footer. Authorisation gives a firm permission for specified activities; regulation means it must follow the applicable rules.
Inflation / purchasing power: Inflation is a rise in prices over time. Purchasing power is what money can buy; a future cash amount may buy less than the same amount today.
Interest / interest rate: Interest is a charge for borrowing or a return paid on savings. The rate expresses it as a percentage over a stated period.
Lender / provider: The organisation supplying a loan or financial product and setting its terms.
Methodology: The calculation method, steps and assumptions behind an estimate.
Nominal annual rate: An annual rate before allowing for compounding within the year. Dividing it by 12 gives the monthly rate used in these repayment calculations.
Rounding / unrounded: Shortening a number for display. An unrounded calculation keeps the more precise value when working out totals.
Simple interest: Interest calculated without earning further interest on earlier interest. This tool uses an approximation for the time regular contributions are held.
Tax / tax treatment: An amount that may be payable to government and the rules deciding how it applies. The applicable rules depend on the transaction and circumstances.
Term / repayment period: The length of time over which the calculation runs. For borrowing, it is the planned repayment period, not necessarily the length of an introductory rate deal.
Withdrawal: Money taken out of savings or investments. This calculator does not model a schedule of withdrawals.

Frequently asked questions

Which mode should I use with an AER?

Annually is the model that treats the entered number as an annual effective rate. Check how the provider calculates interest and when you contribute; this tool still uses month-end contributions.

Why does Monthly show more than Annually for the same rate?

Monthly divides the annual number by 12 and then compounds. Annually uses a lower equivalent monthly rate which compounds back to the annual number entered. They are different rate conventions.

Are monthly contributions included in total contributions?

Yes, along with the entire opening balance. Interest is shown separately.

Is Simple interest exact for regular monthly payments?

No. It assumes future contributions earn interest for half the overall period on average. Exact dated contributions can give a different result.

Is the result after tax or inflation?

No. It is an unadjusted cash illustration. Tax, charges and changes in prices can reduce what the savings are worth to you.

Explore your next step

Check the rate description, payment timing and account conditions before comparing the estimate with a savings product. Use the figures to explore scenarios, not as a promised return.

About this explanation. The methodology describes the existing calculator. Worked examples were checked against its calculation and an independent calculation. This is general information, not a professional recommendation or formal compliance approval.

Further reading from MoneyHelper and government sources: