Term Deposit Calculator
Months
Years
At Maturity (End of Term)
Monthly
Quarterly
Semi-Annually
Annually
Please enter valid numeric values for all fields.
Calculation Results
Total Interest Earned (Gross):
$0.00
Estimated Tax:
$0.00
Net Interest (After Tax):
$0.00
Total Maturity Value:
$0.00
Understanding Term Deposit Rates
A term deposit (also known as a Certificate of Deposit or CD in some regions) is a low-risk investment where you lock away a sum of money for a fixed period at a set interest rate. Unlike a standard savings account, the interest rate on a term deposit is generally fixed, guaranteeing a specific return regardless of market fluctuations.
This Term Deposit Rates Calculator helps investors determine exactly how much interest they will earn over the life of the investment. By inputting your deposit amount, the bank's offered interest rate, and the duration of the term, you can forecast your financial growth with precision.
How Term Deposit Interest is Calculated
The calculation of your return depends heavily on the frequency of interest payments (compounding). The formula varies based on whether interest is paid at maturity or compounded periodically.
- At Maturity (Simple Interest): Interest is calculated only on the principal amount. Formula: Interest = Principal × Rate × Time (in years).
- Compounding (Monthly, Quarterly, Annually): Interest is earned on the principal plus previously earned interest. Formula: A = P(1 + r/n)^(nt).
Key Factors Affecting Your Return
When comparing term deposit rates, consider the following variables used in this calculator:
- Principal (Deposit Amount): The initial sum of money you invest. Higher amounts naturally yield higher absolute returns.
- Interest Rate: The Annual Percentage Rate (APR) offered by the financial institution. Even a small difference (e.g., 0.25%) can impact the final maturity value significantly on large deposits.
- Term Length: The duration the money is locked away. Generally, longer terms offer higher interest rates, though this is not always the case in an inverted yield curve environment.
- Compounding Frequency: How often interest is added to your balance. Monthly compounding yields slightly more than annual compounding or payment at maturity because you start earning interest on your interest sooner.
- Tax Rate: Interest earned on term deposits is usually treated as taxable income. Our calculator allows you to input a tax rate to see your Net Return.
Example Calculation
Let's say you invest $20,000 in a term deposit for 2 years at an interest rate of 4.50% p.a., with interest paid Annually.
- Year 1: $20,000 × 4.5% = $900 interest. Balance: $20,900.
- Year 2: $20,900 × 4.5% = $940.50 interest.
- Total Maturity Value: $21,840.50.
- Total Interest Earned: $1,840.50.
If the same investment paid simple interest "At Maturity," the total interest would only be $1,800 ($900 × 2), highlighting the benefit of compounding.
Why Use a Term Deposit Calculator?
Banks often advertise nominal rates, but the effective return depends on compounding frequency and taxes. A specialized calculator allows you to compare different products—such as a 6-month term vs. a 1-year term—to see which offers the best annualized return for your specific financial goals.