What is compound interest?
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In short: Interest earned on both your original savings and on interest already added — growth accelerates over time. The formula is often described as 'interest on interest'; the Rule of 72 estimates doubling time.
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£10,000 at 5% compounded annually becomes roughly £16,289 in 10 years without further deposits. Monthly compounding slightly increases the total.
Compound interest works against you on debt — credit card balances grow faster when you pay minimum payments only.
Use our savings goal calculator and compound interest guide.
Primary source: gov.uk/individual-savings-accounts
Part of our Savings & ISAs
This quick answer sits inside our wider savings & isas hub — with sub-guides, calculators and step-by-step explainers on the same topic.
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