{"id":266870,"date":"2019-11-28T10:41:32","date_gmt":"2019-11-28T10:41:32","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=266870"},"modified":"2026-02-19T07:16:44","modified_gmt":"2026-02-19T07:16:44","slug":"savings-account-compound-interest","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/savings-accounts\/savings-account-compound-interest","title":{"rendered":"Compare savings accounts with compound interest"},"content":{"rendered":"

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.<\/p>

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Is my money safe?<\/h5>

The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first \u00a3120,000 you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.<\/p><\/div><\/article>

What is compound interest?<\/h3>

\u201cEarning interest on your interest\u201d? What on earth does that mean? Well, let\u2019s imagine you\u2019ve just opened a savings account and have deposited a lump sum into it.<\/p>

If your savings account pays interest monthly and into the account itself, your account balance will grow every month and you\u2019ll 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.<\/p>

For example, say you have \u00a310,000 in a savings account<\/a> that pays 3% a year (gross). If it\u2019s paid annually, at the end of the year you\u2019ll have \u00a310,300. If it\u2019s paid every month, allowing you to take advantage of compound interest, at the end of a year you\u2019ll have \u00a310,304.16. See our compound interest calculator below to work out how much you could earn on your savings.<\/p>

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.<\/p>

But while compound interest is your friend when you\u2019re saving, it can make be a tricky thing when you\u2019re in debt. This is because the interest compounds to make your debt bigger, making it harder to pay it off.<\/p>

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