Savings Accounts High Interest UK

Compound Interest Formula:

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

Principal (P):

GBP

Interest Rate (r):

Compounding Frequency (n):

Time (t):

years

Future Value (FV):

Interest Earned:

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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 allows savings to grow faster than simple interest, where interest is calculated only on the principal amount.

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 formula calculates how much your savings will grow based on your initial deposit, interest rate, compounding frequency, and time period.

3. High Interest Savings in the UK

Details: As of September 2025, the highest interest savings accounts in the UK offer up to 4.75% AER (Annual Equivalent Rate) according to MoneySavingExpert. These rates are typically offered by challenger banks and building societies, though rates can change frequently.

4. Using the Calculator

Tips: Enter your initial deposit in GBP, the annual interest rate (as a percentage), select how often interest is compounded, and the time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is AER?
A: AER (Annual Equivalent Rate) shows what the interest rate would be if interest was paid and compounded once each year. It allows you to compare savings accounts on a like-for-like basis.

Q2: Are high interest savings accounts safe?
A: In the UK, savings up to £85,000 per person, per banking group are protected by the Financial Services Compensation Scheme (FSCS).

Q3: How often do interest rates change?
A: Savings account interest rates can change frequently, especially in response to Bank of England base rate decisions. It's important to check current rates regularly.

Q4: Are there any restrictions on high interest savings accounts?
A: Some accounts may have restrictions such as limited withdrawals, minimum deposit requirements, or introductory rates that drop after a certain period.

Q5: Should I consider inflation when saving?
A: Yes, it's important to consider the real return on your savings (interest rate minus inflation) to understand your actual purchasing power growth.