1. What Is The ISA Interest Calculator?

The ISA Interest Calculator helps you estimate the growth of your Individual Savings Account (ISA) investments using compound interest. Based on Martin Lewis's financial advice, this tool helps UK savers understand how their money can grow tax-free in an ISA.

2. How Does The Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount including interest (£)
• \( P \) — Principal investment amount (£)
• \( r \) — Annual interest rate (as a decimal)
• \( t \) — Time the money is invested for (years)

Explanation: The formula calculates how your initial investment grows over time with compound interest, where interest is earned on both the principal and accumulated interest.

3. Importance Of ISA Interest Calculation

Details: Understanding compound interest helps you make informed decisions about saving and investing. ISAs offer tax-free growth, making them an efficient way to build savings over time.

4. Using The Calculator

Tips: Enter your initial investment amount in pounds, the annual interest rate as a percentage, and the investment period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is an ISA?
A: An Individual Savings Account (ISA) is a tax-free savings or investment account available to UK residents. You don't pay tax on interest, dividends, or capital gains.

Q2: What are the current ISA allowances?
A: The annual ISA allowance for 2023/24 is £20,000. This can be split between different types of ISAs (Cash, Stocks & Shares, Innovative Finance, Lifetime).

Q3: How often is interest compounded in ISAs?
A: Most ISAs compound interest annually, but some may compound monthly or quarterly. This calculator assumes annual compounding.

Q4: Are ISA rates fixed or variable?
A: It depends on the provider. Some offer fixed rates for a set period, while others have variable rates that can change.

Q5: Can I withdraw money from my ISA?
A: Yes, but withdrawal rules vary by ISA type. Some may allow instant access, while others have notice periods or penalties for early withdrawal.