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Compound interest is interest on interest, so if you have an (APR) interest bearing account, the first years interest has interest applied in the second and subsequent years.

Therefore the more years you can save without touching the money , the more interest you will make.

Originally posted by **enjoyyourshoes**
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Whilst this is true, many of these regular savers are now one year fixed term, and interest paid annually, so it doesn't apply.

For low rates of interest the compounding effect doesn't make a huge difference unless it goes on for many years. But it is there. For example about 50 not about 70 years to double money at 1.4%.

Someone earlier suggested making a spreadsheet for calculating compound interest, but actually it can be done on simple calculators.

(1 + x) ^ n, where x is the interest as a decimal fraction, i.e. 0.02 for 2%, so for example 1.02^5 = 1.10408, or 1.07^10 = 1.1967

Only if there are both an initial sum and regular savings does it get more complicated, and then I use an online monthly savings calculator.