What is the difference between AER and nominal rate?

The Annual Equivalent Rate (AER) normalises for compounding frequency so accounts can be compared fairly. A 5% nominal rate compounded daily gives an AER of 5.127%.

How does the Rule of 72 work?

Divide 72 by the annual interest rate to estimate years to double your money. At 6%, 72 ÷ 6 = 12 years. This is an approximation; the precise calculation uses logarithms.

04 / COMPOUND INTEREST

Compound Interest Calculator

See how interest compounds over time. Choose your compounding frequency and compare the effective annual rate against the nominal rate.

GuideHow compound interest works

Savings and Compounding Cluster

This cluster connects savings growth, compounding, savings goals, retirement projections, and emergency-fund planning so users can move from formula to decision path quickly.

Parameters

Principal

Annual Interest Rate

Time Period

years

Compounding Frequency

Results

Final Amount

£16,470

Principal

£10,000

Interest Earned

£6,470

65% gain

Effective Annual Rate (EAR)

5.12%

accounts for compounding frequency

Growth Over Time

£10,512

£11,615

£12,834

£14,180

£15,668

Y10

£16,470

Cluster Hubs

Use these organising pages when you want the main calculators and supporting guides for this topic grouped in one place.

Browse the investing calculators hubUse the investing hub for compound-growth, market-context, and long-term return comparisons.Open the savings calculators hubStart with the main savings category hub for growth, goals, resilience, and recurring-cost trade-offs.Open the savings and compound hubGroup growth, goal, retirement, and emergency-fund pages under one savings path.

Related Calculators

Move sideways to closely related calculators without leaving the same topic cluster.

Use the Savings GrowthHow compound interest grows your savings with regular contributions.Use the Save for a GoalHow long to reach a target, or what monthly saving hits a deadline.Use the Retirement SavingsProject your pension pot, including employer contributions and inflation.Use the Subscription DrainTrue 10-year cost of subscriptions and investment opportunity cost.

Related Guides

Use these supporting explainers when you need the formula, assumptions, or decision framing behind the numbers.

Read Currency Exchange Fees Read Tax Loss Harvesting Read Market Forecasts Rate Cuts Understanding Compound InterestLearn how frequency and effective annual rate change the outcome.