A principal, a rate and a term, with interest paid at the frequency you choose. This works out the interest earned and the value at maturity.
The frequency matters more than it looks. Interest paid at maturity on a multi-year deposit compounds; interest paid monthly and withdrawn does not.
Works out the interest and maturity value on a term deposit, with interest reinvested or paid out at maturity.
Interest paid
Monthly, quarterly, annually or at maturity. Australian banks typically offer a slightly lower headline rate for more frequent payment, because you get the money sooner.
Term months
How long the money is locked away. Breaking a term deposit early attracts an interest rate reduction that can remove most of the return.
Total interest is the return over the term. Maturity value is the principal plus that interest, where interest is retained rather than paid out.
Compare payment frequencies on the same rate and term: paying at maturity produces the most, because each interest payment then earns interest itself. If the bank offers a lower rate for at-maturity payment, that comparison is the one to make.
Interest is assessable income in the year it is received, which matters for the payment frequency you choose near the end of a financial year.
Every figure below is computed by the same calculator on this page, from the inputs described. Nothing here is typed in by hand, so an example cannot disagree with the tool.
A single interest payment at the end. Over twelve months the compounding advantage over monthly payment is small; over three years it is not.
Interest arrives monthly and compounds if retained. Compare the totals: the difference is the value of receiving money sooner and reinvesting it.
For interest paid periodically and retained, the balance compounds at the periodic rate for the number of periods in the term.
For interest paid at maturity, the interest accrues over the full term and is added once at the end.
Interest is retained, not withdrawn
If you take the interest as income each month, there is no compounding and the total is simply the rate times the principal times the term.
No tax deducted
Interest is assessable income. If the bank does not hold your tax file number it must withhold at the top rate, which is a costly and avoidable oversight.
The deposit runs to maturity
Breaking early triggers a rate reduction and usually a notice period. Both are set by the bank and are not modelled.
The return is before tax
At a 37% marginal rate, a 4.6% deposit returns about 2.9% after tax — which may be below inflation. That comparison is the one that matters for a long-held cash balance.
An offset account may be better
If you have a mortgage, an offset saves interest at the loan rate with no tax on the benefit, and the money stays accessible. Compare the two before locking money away.
Shows how a balance grows over time with regular deposits and compounding interest.
Estimates what holding a balance in a full offset account saves in interest, and how much sooner the loan closes if repayments stay the same.
Works out how much to set aside each period to reach a savings target by a deadline.
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