Worked example
Deposit $10,000 for 2 years at 4% a year and it matures at $10,831, which is $831 of interest.
- Deposit amount
- $10,000
- Interest rate (per year)
- 4%
- Time period
- 2 years
- Interest earned
- $831
- Maturity value
- $10,831
| Year | Interest so far | Value |
|---|---|---|
| 1 | $407 | $10,407 |
| 2 | $831 | $10,831 |
How to use this calculator
- Enter the amount you are depositing.
- Enter the annual interest rate and the term.
- Choose how often the bank compounds interest.
Frequently asked questions
What is a term deposit?
A sum placed with a bank for a fixed period at a fixed rate — also called a fixed deposit, time deposit or savings bond. The interest is known in advance, unlike market investments.
Does compounding frequency matter?
Yes, a little. $10,000 at 4% for 2 years grows to $10,831 with monthly compounding, against $10,816 with yearly compounding. Monthly compounding at 4% is an effective 4.07% a year.
What if I need the money early?
Many banks allow early withdrawal with a penalty or a lower rate. The calculator assumes the deposit is held to the end of the term.
Is tax included?
No. How deposit interest is taxed depends on your country.