Introduction
Compound interest means interest earns interest. That is why starting early, even with a small monthly amount, often beats starting later with a larger amount.
Quick answer
- Interest is calculated on the growing balance, not just the starting amount.
- Monthly deposits add up, and their interest adds up too.
- Rates are not guaranteed.
What is it?
Each month, interest is added to the balance, then the next month's interest is calculated on the new, larger balance.
How to use the calculator, step by step
- Enter your numbers in the calculator linked above.
- Press Calculate.
- Check the main result and the total, not just the first number.
- Try a second version — a different rate, term or payment — and compare the totals.
Worked example
Starting with £1,000, saving £100 a month at 5% a year, compounded monthly for 10 years: £17,175.24 total, from £13,000 contributed and £4,175.24 interest.
Common mistakes
Assuming a fixed rate forever; forgetting tax and inflation; comparing nominal totals without checking real value.
Frequently asked questions
Is the calculator result exact? No, it is an estimate for learning and planning, based on the numbers you enter and the assumptions stated on the calculator page.
Should I check with a professional? Yes, for a mortgage, loan, tax or investment decision, check with your lender, bank, tax authority or a qualified adviser before you decide.
Can I use this in the US, UK or Canada? The maths is the same, but rates, tax bands and lender rules differ by country. Use the numbers and rules for your country, and check the official source where a rate or band matters.
Conclusion and next step
Try your own numbers in the calculator, compare the totals, and read the next calculator guide from the homepage when you are ready.
Disclaimer: This article and calculator are for information and education only. Results are estimates and not financial advice. Please check with your lender or a qualified adviser before making a financial decision.