What this calculator shows you
This tool projects how a savings pot could grow from an opening balance plus regular monthly deposits, at a given Annual Equivalent Rate (AER), over your chosen term. It's designed around how everyday UK savings accounts actually work — a fixed or variable interest rate applied to a balance that grows through your own deposits as well as the interest itself compounding on top.
AER versus gross rate
UK savings providers are required to quote AER, the Annual Equivalent Rate, which standardises how interest compounding is expressed so you can compare accounts on a like-for-like basis regardless of whether interest is actually paid monthly, quarterly or annually. A account paying a lower gross monthly rate can have the same AER as one paying a higher rate less frequently, because more frequent compounding needs a slightly lower headline rate to reach the same annual result. Always compare AER, not the frequency or the gross rate alone, when shopping around.
Easy access versus fixed-rate and notice accounts
Easy access accounts let you withdraw whenever you like but typically pay a lower rate, and that rate can be changed by the provider at any time, sometimes with little notice. Fixed-rate bonds lock your rate for a set term, usually in exchange for restricting or entirely blocking withdrawals until maturity, which trades flexibility for rate certainty. Notice accounts sit in between, requiring a set notice period before you can withdraw without penalty. Our fixed-rate bonds guide and regular savings accounts guide go through how each type works and who they typically suit.
Where to hold your savings for the best return
Once your emergency fund is in an easily accessible account, it's worth checking whether a cash ISA or a regular current account switch offer might beat a standard savings account's rate for further cash you don't need instant access to. If you're saving for a longer-term goal and won't need the money for at least five years, it's also worth weighing cash savings against investing instead — our savings versus investment calculator compares the two directly using the same kind of monthly-deposit structure as this tool.
Why inflation matters for cash savings
A savings rate that looks attractive in isolation can still lose real value if inflation runs higher than the interest you're earning, because the pounds you get back buy less than the pounds you put in. This calculator shows the nominal pot — the actual number of pounds you'll have — without adjusting for inflation, so it's worth also checking our inflation erosion calculator to see the real-terms picture alongside this one, particularly for money left in savings over several years.
A worked example
Using the calculator's defaults — a £2,000 opening balance, £200 deposited every month, at a 4.2% AER, over five years — you'd deposit £2,000 up front plus £12,000 across 60 monthly payments, for £14,000 paid in altogether. With interest compounding monthly on the whole balance, the projected pot comes out at roughly £15,650, meaning interest has added around £1,650 on top of your own deposits over the five years.
If you instead found an account paying 5.2% AER — a single extra percentage point — on exactly the same deposits and term, the projected pot rises to approximately £15,870, about £220 more. That's a useful reminder that shopping around for a meaningfully better rate, even by what looks like a small margin, is worth the ten minutes it takes to compare accounts, especially the longer you plan to hold the money.
Reviewing your rate regularly
Savings rates aren't fixed for life on most easy access accounts, and providers can and do quietly move existing customers' rates down over time while advertising a more competitive rate to attract new savers — a pattern sometimes called rate erosion or a "loyalty penalty". It's worth checking your actual current rate against the best available on the market at least once or twice a year, since a provider that offered a leading rate when you opened the account may no longer be anywhere near the top of the table a year or two later, even though nothing about the account itself has visibly changed.
Frequently asked questions
Is my interest taxed?
Most savers benefit from the Personal Savings Allowance, which lets basic-rate taxpayers earn a set amount of savings interest tax-free each year, with a smaller allowance for higher-rate taxpayers. Interest inside a cash ISA is tax-free regardless of this allowance. See our guide to tax on savings interest for the current thresholds.
What counts as a good AER right now?
Rates move with the Bank of England base rate and market competition, so there's no fixed benchmark — comparison sites are the quickest way to check current top rates across easy access, notice and fixed-term accounts.
Should I split my savings across several accounts?
Many savers do, partly to access the best rate in each category (easy access versus fixed term) and partly to stay within the £85,000 per-institution protection limit under the Financial Services Compensation Scheme if their total savings are substantial.
Does a regular savings account work the same way as this calculator?
Broadly yes, though regular savings accounts sometimes pay a higher rate in exchange for a cap on the maximum monthly deposit and restrictions on withdrawals — check the specific terms rather than assuming they behave identically to a standard easy access account.
What if I need to make a withdrawal partway through the term?
This calculator assumes an unbroken run of deposits with no withdrawals — taking money out partway through will reduce your final pot below the projection, roughly in proportion to the amount withdrawn and how early it happened, since that money then misses out on any further compounding.
Is a fixed-rate bond a good alternative to easy access for this kind of goal?
It can be, if you're confident you won't need the money before the fixed term ends — the trade-off is usually a somewhat higher rate in exchange for reduced or no access, which suits a clearly defined savings goal better than money you might need unexpectedly.