Calculate the maturity value and interest earned on a term deposit, compounded annually.
Annual compounding (example)
This calculator computes the maturity value and total interest earned on a term deposit — a fixed-term savings product where you lock away a lump sum at a fixed interest rate for a set period. It helps you compare different term deposit offers and understand how the interest rate and term length affect the total return on your deposit.
This calculator uses annual compounding — interest is credited annually and added to the balance, which then earns interest in subsequent years. For a 1-year term deposit where interest is paid at maturity, compounding is equivalent to a simple interest calculation (since there is only one period). For multi-year terms, compounding produces slightly more interest than simple interest would.
Formula: Maturity Value = Deposit Amount × (1 + Interest Rate)Term Years. Interest Earned = Maturity Value − Deposit Amount.
Example: A A$10,000 term deposit at 4.5% (example rate — enter your offered rate) for 1 year: Maturity value = A$10,450. Interest earned = A$450. For a 3-year term at the same rate: Maturity value ≈ A$11,411.66. Interest earned ≈ A$1,411.66. (Note: this example is for illustration purposes only — actual rates offered vary by institution, term, and deposit amount.)
Term deposits are one of the most common savings vehicles in Australia, offered by authorised deposit-taking institutions (ADIs) including the major banks, regional banks, building societies, and credit unions. Unlike savings accounts, term deposits lock your funds away for a fixed period in exchange for a guaranteed fixed interest rate — you generally cannot access the money without penalty during the term. Term deposit rates in Australia are influenced by the RBA cash rate but are set by each institution independently — rates vary significantly between providers for the same term and amount, so comparing across multiple institutions (using comparison sites or directly checking each provider) before investing is worthwhile. Interest can be paid at maturity (common for terms of 1 year or less), monthly, or quarterly depending on the product. Importantly, the interest earned on a term deposit is assessable income in Australia and taxed at your marginal tax rate in the year it is received (or credited) — the maturity value shown in this calculator is the gross (pre-tax) amount. Australians should also be aware that deposits held with ADIs are protected under the Australian Government's Financial Claims Scheme (FCS), which guarantees deposits up to A$250,000 per account holder per ADI — providing peace of mind on the safety of term deposits within this limit.
Most Australian term deposits allow early withdrawal, but with a penalty — typically a reduction in the interest rate (often to a very low rate for the period held, or forfeiture of some or all interest earned). The specific penalty varies by institution and product — check the terms and conditions before investing. Some institutions require a notice period (e.g., 31 days) before allowing early withdrawal. If you think you might need the funds, a high-rate savings account may be a better option despite potentially lower rates.
Yes — deposits held with ADIs (authorised deposit-taking institutions) regulated by APRA are covered by the Australian Government's Financial Claims Scheme (FCS) up to A\$250,000 per account holder per institution. This applies to term deposits at banks, building societies, and credit unions. For deposits above A\$250,000, the excess is not guaranteed — if you are investing a large sum, consider spreading it across multiple ADIs to maximise FCS coverage.
Interest earned on a term deposit is assessable income in the year it is received or credited, taxed at your marginal income tax rate plus the Medicare levy. For a 1-year term deposit paid at maturity, the interest is assessed in the financial year of maturity. For multi-year deposits with annual interest payments, interest is assessed annually as it is credited. You should include term deposit interest in your annual tax return — the institution will issue a summary of interest paid for tax reporting purposes.
A term deposit locks your money away for a fixed period at a guaranteed fixed rate — you cannot make deposits or withdrawals during the term without penalty, but the rate is certain for the full period. A savings account allows flexible deposits and withdrawals but typically has a variable interest rate that can change at any time. Term deposits often (but not always) offer higher rates than savings accounts for the same amount, in exchange for the reduced flexibility.
It depends on current rate expectations and when you need the funds. If interest rates are expected to rise, shorter terms (3-6 months) allow you to reinvest at higher rates sooner. If rates are expected to fall (or you expect them to be volatile), locking in a longer term at the current rate protects your return. For funds you do not need for a specific period, the longer term typically offers a higher rate (though not always — sometimes shorter terms offer higher rates in an inverted curve environment). Always check the actual rates for different terms before deciding.
Generally no — term deposits are a fixed lump-sum product. Once the deposit is made, no additional deposits can be added during the term. If you want to invest additional funds, you can open a separate term deposit. Some institutions offer "call deposit" or "at-call" products that allow additions, but these typically carry lower rates than standard term deposits.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. The interest rate used is an example only and does not represent a rate currently offered by any specific institution — actual term deposit rates vary by institution, term, and deposit amount, and change frequently. Interest earned is generally subject to income tax at your marginal rate. Deposits with ADIs are covered by the Financial Claims Scheme up to A\$250,000 per account holder per institution. Compare current rates and consult a qualified financial adviser before investing.