How much interest can you earn with a term deposit? Our term deposit calculator helps you determine your accumulated savings based on the amount invested, the term (duration) of investment and the interest rate offered. You can use our term deposit comparison tables to see the highest rates currently available on Canstar’s database.

Please note: The calculations do not take into account all fees and charges. The results provided by this calculator are an estimate only, and should not be relied on for the purpose of making a decision in relation to a term deposit. Consider whether you need financial advice from a qualified adviser. Interest rates and other costs may change over time, affecting the total return from the product.

How do you calculate interest on a term deposit?

Interest on a term deposit is generally calculated as a percentage of the amount deposited, at an annual rate. To calculate the annual interest earned, you multiply the deposit amount (e.g $10,000) by the interest percentage amount (e.g. 2% or 0.02). You then multiply that by the number of years for the total amount of interest earned.

Where interest is paid on a term deposit at regular intervals (e.g. monthly or quarterly) and reinvested into the term deposit, the deposit would start to earn compound interest (where further interest is earned on interest already paid). However, banks generally offer a lower rate of interest on term deposits that pay interest at regular intervals (as opposed to just when the deposit matures) and this has the effect of offsetting the impact of compound interest.

What is a good term deposit rate?

The term deposit rates offered by banks can fluctuate, often in line with the Reserve Bank of Australia’s official cash rate, and also vary from provider to provider. A good rate on a term deposit is generally one that’s competitive relative to the other products in the market at a given time, but is also offered on a product that meets your needs. This means factoring in other considerations like the length of the term and how often interest is paid.

Another way of assessing what a ‘good’ term deposit rate involves comparing it to the other main form of cash deposit product: savings accounts. If you are going to lock your money away in a term deposit for a set period of time, one priority could be to ensure you at least earn a higher rate of interest than you could by simply having your money in a high interest savings account – a product which can come with greater flexibility. Bear in mind, though, that some savings accounts still come with restrictions if you want to earn the highest interest rate available.

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How long do you have to put money in a term deposit for?

If you invest in a term deposit, you will need to leave the money untouched for the duration of the term, which typically ranges from one month up to five years. If you withdraw the money early, you may face penalties, such as early withdrawal fees or interest penalties.

What kind of interest rate can I get on a term deposit?

Term deposits come with a fixed interest rate for the duration of the term. How high that interest rate will be will depend on the bank you choose, the length of the term (generally the longer the term the higher the rate, but not always) and how frequently interest is paid on the deposit (the more frequently interest is paid, the lower the interest rate, generally).

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Can I break a term deposit?

It’s usually possible to break a term deposit if you need the money urgently or decide mid-term that you want to move your money somewhere else. The thing to bear in mind is that you will likely be penalised for breaking the term. For example, a break fee may apply or an interest penalty could apply.

What happens at the end of the term deposit term?

At the end of the term, your term deposit is said to ‘mature’. At this point, you generally have the option of withdrawing the funds along with any interest earned, or reinvesting the money in another term deposit based on the rates available at that time.

If you do not make a decision either way, there is a chance that the bank will automatically reinvest the money in the default product it uses to auto reinvest customers’ term deposit funds (or potentially the same term again). Generally, it’s a good idea to make a decision on what happens at the end of the term based on your current needs and the market rates that are available, rather than to let your money automatically roll over without first considering if this is the best approach.

Are term deposits worth it?

Whether a term deposit is a good option for you will depend on your circumstances and goals. They can be attractive to savers who are looking for the certainty of a guaranteed return on their investment over a set period of time. But there are drawbacks too, including the lack of flexibility if you need to access your money sooner.

The returns can also be low compared to what’s possible with other investment products (shares, for example). That said, term deposit returns are guaranteed, and some investors may come to the conclusion that a bird in the hand is worth two in a volatile share market. Consider speaking to a financial adviser if you are seeking guidance on where to invest your money based on your situation.

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Last updated: 12/07/2022

This content was reviewed by Sub Editor Jacqueline Belesky prior to publication as part of our fact-checking process.


Author: Sean Callery

Sean Callery Author HeadshotSean Callery is Deputy Editor at Canstar. He and his team cover just about every finance and lifestyle topic under the sun, from property and travel to the nitty-gritty of financial products like saving products, home loans, superannuation, and insurance. Armed with a Bachelor’s Degree in Journalism (Dublin City University) and a Masters Degree in Creative Advertising (Edinburgh Napier University), Sean has accumulated more than a decade of international experience in communications roles – in Australia, the UK and Ireland – across finance, banking, consumer and legal affairs, and more. His work as a journalist has featured in various publications and media outlets, including the Drogheda Independent, the Law Society of Scotland Journal and Ireland’s national broadcaster, Raidió Teilifís Éireann. Before joining Canstar, Sean oversaw content at Great Southern Bank (formerly CUA), one of Australia’s biggest member-owned financial institutions. Follow Sean on LinkedIn or on Twitter and Canstar on Facebook. Meet the Canstar Editorial Team. 


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