Best Savings Rates UK Money Saving Expert

Compound Interest Formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Principal Amount (P):

GBP

Annual Interest Rate (r):

Compounding Frequency (n):

Time Period (t):

years

Future Value (FV):

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1. What Is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It's often referred to as "interest on interest" and can cause wealth to grow exponentially over time.

2. How Does The Calculator Work?

The calculator uses the compound interest formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Where:

\( FV \) — Future Value (GBP)
\( P \) — Principal Amount (GBP)
\( r \) — Annual Interest Rate (decimal)
\( n \) — Number of Compounding Periods Per Year
\( t \) — Time in Years

Explanation: The more frequently interest is compounded, the greater the return on your savings. This calculator helps you understand how different compounding frequencies affect your savings growth.

3. Best Savings Rates In The UK

Details: According to Money Saving Expert (as of September 2025), the best easy access savings accounts offer up to 4.75% AER. Fixed-rate bonds may offer higher rates but require locking your money away for a set period.

4. Using The Calculator

Tips: Enter your initial deposit amount, the annual interest rate (as a percentage), select how often interest is compounded, and the time period in years. The calculator will show your projected savings balance.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between AER and APR?
A: AER (Annual Equivalent Rate) shows what you'll earn on savings, while APR (Annual Percentage Rate) shows what you'll pay on borrowing. AER accounts for compound interest.

Q2: Are savings accounts safe in the UK?
A: UK savings are protected up to £85,000 per person, per financial institution under the Financial Services Compensation Scheme (FSCS).

Q3: Should I choose easy access or fixed rate?
A: Easy access offers flexibility but lower rates. Fixed rates typically offer higher returns but require locking your money away for the term.

Q4: How often is interest typically paid?
A: This varies by account but common options include monthly, quarterly, or annually. More frequent compounding generally results in higher returns.

Q5: Are savings interest taxable?
A: In the UK, you can earn up to £1,000 in savings interest tax-free (basic rate taxpayers) or £500 (higher rate taxpayers) under the Personal Savings Allowance.