PayToolkit › Compound Interest Calculator

Compound Interest Calculator

See how your money grows when interest earns interest — with a starting sum, monthly contributions, and any rate and timescale.

Final balance
Total contributions
Interest earned
Growth multiple

Assumes monthly compounding with contributions added at the end of each month. Investment returns are not guaranteed; inflation reduces real value over time.

Why compounding matters

Compound interest means each month's growth is calculated on your contributions plus all previous growth. Over short periods the effect is modest, but over decades it dominates: at 5% a year, money doubles roughly every 14 years, and in a 30-year projection more than half the final pot is typically growth rather than contributions. Held inside an ISA, all of that growth is tax-free — see our ISA Calculator.

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Frequently asked questions

How is compound interest calculated?

Each month your balance grows by the annual rate divided by 12, and your monthly contribution is added. Next month's growth is then calculated on the new, larger balance — growth on growth.

What rate should I assume?

Cash savings currently pay less than long-run stock market averages. Many planners model 4–6% for diversified investments and 2.5% for inflation; the rate you choose changes long-term results dramatically.

Is compound interest taxed?

Outside tax wrappers, interest above your Personal Savings Allowance and investment gains can be taxed. Inside an ISA or pension, growth compounds completely tax-free.

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