Compare savings accounts with compound interest

Earning interest on your interest is an easy way of boosting your savings. Find and open an account with rates of up to 7.5%.

1 - 10 of 1642
Product Account type Withdrawals Open with Deposit protection Rate Open via Incentive Table product description
Fixed
Instant access
£1 - £5,000,000
FSCS logo
protected
4% AER fixed until 27.05.26
Open via: website, mobile app.
Available until 05:00 PM on 02/05/2025 to new customers and 08/05/2025 to existing customers. Please be aware that this offer can be withdrawn at any time. To apply, you must be 16+ and a UK resident. You can make additional payments or withdrawals from your account until 3:30pm on 23/05/2025. After this date partial withdrawals are not allowed. Early closure charges may apply. Interest is calculated daily and paid on the first business day of every month and on the Maturity Date. 1 year terms earn 4% / 3.93% AER/Gross p.a (fixed) on balances between £1 - £5million.
Variable
95 days notice needed
From £0
FSCS logo
protected
4.84% AER variable
Open via: mobile app.
Get £10 cashback after saving over £100 in your first 90 days with Plum. T&Cs apply.
Cash ISA
Withdrawals not permitted
From £500
FSCS logo
protected
3.95% AER fixed for 1 year
Open via: branch, post.
Principality BS – 6 Month Regular Saver (Issue 3)
Principality Building Society logo
Regular Savings
Withdrawals not permitted
£1 - £1,200
(pay in from £1 to £200 per month)
FSCS logo
protected
7.5% AER fixed for 182 days
Open via: branch, website.
View details
The Co-operative Bank – Regular Saver Issue 1
The Co-operative Bank logo
Regular Savings
Withdrawals permitted
£1 - £3,000
(pay in up to £250 per month)
FSCS logo
protected
7% AER variable
Open via: branch, website. Additional account needed
View details
first direct – Regular Saver Account
first direct logo
Regular Savings
Withdrawals not permitted
£25 - £3,600
FSCS logo
protected
7% AER fixed for 1 year
Open via: website, mobile app. Additional account needed
Put away between £25 and £300 for a fixed 12 month term. If you save £300 every month for 12 months and qualify for the 7.00% AER/gross p.a. interest rate, you'll earn approximately £136.50 interest (gross). Interest is calculated daily and paid 12 months after you opened the account. No partial withdrawals allowed. Early closure will result in interest being paid at the standard account variable rate.
View details
Bath BS – 16-25 Regular Saver
Bath Building Society logo
Regular Savings
2 per year
£10 - £7,000
FSCS logo
protected
6.89% AER variable
Open via: branch, website, mobile app.
View details
Skipton BS – Member Branch Regular Saver Issue 4
Skipton Building Society logo
Regular Savings
Withdrawals not permitted
£1 - £3,000
(pay in up to £250 per month)
FSCS logo
protected
6.5% AER variable
Open via: branch, post, telephone. Existing members only
View details
Melton BS – Adcock Regular Saver
The Melton Building Society logo
Regular Savings
Withdrawals permitted
Up to £6,000
(pay in up to £150 per month)
FSCS logo
protected
6.5% AER variable
Open via: branch.
View details
Nationwide Building Society – Flex Regular Saver Issue 4
Nationwide Building Society logo
Regular Savings
Withdrawals permitted
From £1
(pay in up to £200 per month)
FSCS logo
protected
6.5% AER variable
Open via: website, mobile app. Additional account needed
View details
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The concept of compound interest can sound a bit technical, but in a nutshell, it means earning interest on your interest. In the long term, it can make a significant difference to your savings as long as you let the interest payments build up in your account.

FSCS logo
Is my money safe?

The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £85,000 (£170,000 for a joint account) you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.

What is compound interest?

“Earning interest on your interest”? What on earth does that mean? Well, let’s imagine you’ve just opened a savings account and have deposited a lump sum into it.

If your savings account pays interest monthly and into the account itself, your account balance will grow every month and you’ll earn interest on your interest as well as interest on your savings. At the end of the year, your savings will have grown a bit more than they would have with a savings account that only pays interest annually.

For example, say you have £10,000 in a savings account that pays 3% a year (gross). If it’s paid annually, at the end of the year you’ll have £10,300. If it’s paid every month, allowing you to take advantage of compound interest, at the end of a year you’ll have £10,304.16. See our compound interest calculator below to work out how much you could earn on your savings.

Bear in mind that how frequently the interest is compounded can make a big difference too: if it compounds every day then your savings will grow quicker than if it compounds every year.

But while compound interest is your friend when you’re saving, it can make be a tricky thing when you’re in debt. This is because the interest compounds to make your debt bigger, making it harder to pay it off.

Simple vs compound interest

In the graph below, we show you what happens to your savings if you put £5,000 in a savings account that pays a 5% gross yearly rate.

“Simple interest” shows how your savings would grow if you didn’t keep your interest in the same account – say, because you move it to a separate current account that doesn’t earn any interest. “Compound interest” shows you what happens if you keep the interest in the same savings account, so that you earn interest on your interest. In this example, interest is compounded monthly.

As you can see, the difference becomes more and more noticeable as years go by.

Compound savings calculator

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£
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Use the fields above to estimate your return.

Compounding an interest rate more frequently gives you a higher annual equivalent rate. But bear in mind that the rate of compounding has generally already been accounted for in the AER when a bank advertises a savings product. So an account with an annual equivalent rate of 7.25% which compounds interest daily is actually applying around a 7% interest rate.

How does compound interest affect my savings account?

Compound interest is less a feature of your savings account than a strategy you can use to boost your savings. You can take advantage of it by constantly putting aside both your initial savings and the interest you earn on them so that the interest is calculated on an ever-increasing pot.

However, some savings accounts will let you take advantage of compound interest automatically, while with others you’ll have to wait until they expire to get your interest, and then put the whole sum in a new account. It depends on two main factors:

  • How often interest is paid against your account’s time limit. For example, if you have a one-year fixed rate account that pays interest annually, you won’t be able to take advantage of compound interest. You will if interest is paid monthly instead, or if it’s paid annually but your fixed-rate account lasts more than one year.
  • Whether interest is paid into the same savings account. Some savings accounts give you the choice between having your interest paid into the account itself or into your current account. If you want to take advantage of compound interest, you need to have it paid into the savings account itself.

Some of the savings accounts that pay the best rates (such as regular savings accounts) only pay interest upon maturity, so there isn’t any compound interest involved. Conversely, easy access savings accounts don’t normally have an expiration date, and by definition you can deposit and withdraw money when you like, so to take advantage of compound interest you just have to avoid withdrawals.

Taking advantage of the snowball effect of compound interest can be a powerful way of growing your savings.”

Katherine Denham, award-winning personal finance expert

How to make the most of compound interest

  • See the long term picture. At the beginning, the extra money you can earn thanks to compound interest will be practically negligible. It will only make an actual difference over the course of a few years, as your savings grow.
  • Reinvest both your savings and your interest. Even if your savings account deal only lasts one year and pays interest upon maturity, there is nothing stopping you from taking advantage of compound interest on a year-to-year basis. At the end of the deal, open another savings account and deposit both your initial savings and the interest you’ve earned on it.
  • Avoid withdrawals. This is actually good savings practice in general. Don’t touch your savings if you can avoid it. Instead, you should have a separate emergency fund you can dip into every now and then.
  • Don’t let compound interest stop you from hunting for great rates. As we said, top-paying savings accounts often only pay interest at maturity. However, a great rate will usually make a much bigger difference than compound interest, so you should still go for it. Once the introductory deal is over, just remember to compare accounts again and reinvest both your savings and any interest you’ve earned if you can. You can compare savings accounts by interest rate here.

Pros and cons of a savings account with compound interest

Pros

  • Easy way to help you boost your savings
  • Some accounts will let you take advantage of compound interest automatically

Cons

  • Not all savings accounts let you benefit from compound interest
  • It’s best not to withdraw money from your account
  • Accounts that let you take advantage of compound interest might not pay the best rates

An overview of our savings accounts with compound interest comparison

Rates up to 7.5% AER
Number of accounts 1,653
Number of brands 134
Minimum investment £0
Maximum investment £10,000,000
Opening options Branch, website, mobile app, post, telephone

Bottom line

Compound interest can be a useful strategy to help your savings grow over time. However, to really benefit you’ll need to avoid making withdrawals from your account and have the patience to let your savings grow over a number of years.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
To make sure you get accurate and helpful information, this guide has been reviewed by Katherine Denham, a member of Finder's Editorial Review Board.
Valentina Cipriani's headshot
Writer

Valentina Cipriani was a writer at Finder UK. She wrote news, features and guides about banking and credit cards, helping people to improve their financial lives. She holds an MA in International Journalism. See full bio

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