Cash ISA Interest Calculator

Compound Interest Formula:

\[ A = P \times (1 + R / n)^{n \times T} \]

Principal Amount (P):

GBP

Annual Interest Rate (R):

decimal

Compounding Frequency (n):

per year

Time Period (T):

years

Final Amount (A):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Cash ISA Interest Calculator?

The Cash ISA Interest Calculator estimates the final amount in a Cash ISA account using compound interest calculations. It helps investors understand how their savings can grow over time with regular compounding.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times (1 + R / n)^{n \times T} \]

Where:

\( A \) — Final amount (GBP)
\( P \) — Principal amount (GBP)
\( R \) — Annual interest rate (decimal)
\( n \) — Compounding frequency per year
\( T \) — Time period in years

Explanation: The formula calculates how an initial investment grows with compound interest, where interest is added to the principal at regular intervals, creating exponential growth.

3. Importance of Compound Interest Calculation

Details: Understanding compound interest is crucial for financial planning, retirement savings, and maximizing returns on Cash ISA investments over the long term.

4. Using the Calculator

Tips: Enter principal amount in GBP, annual interest rate as a decimal (e.g., 0.05 for 5%), compounding frequency (e.g., 12 for monthly), and time period in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is a Cash ISA?
A: A Cash ISA (Individual Savings Account) is a tax-free savings account available to UK residents, allowing savings to grow without paying tax on the interest earned.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (e.g., monthly vs annually) results in higher returns due to interest being calculated and added to the principal more often.

Q3: What are typical interest rates for Cash ISAs?
A: Interest rates vary by provider and market conditions, typically ranging from 0.5% to 3% annually (0.005 to 0.03 in decimal form).

Q4: Are there contribution limits for Cash ISAs?
A: Yes, there is an annual ISA allowance set by the UK government, which is £20,000 for the 2023/2024 tax year.

Q5: Can I withdraw money from a Cash ISA?
A: Most Cash ISAs allow withdrawals, but terms vary by provider. Some may have notice periods or withdrawal restrictions.