Calculate your interest earned and total at maturity for any term deposit — including monthly, quarterly and annual payment options.
How Term Deposit Interest is Calculated
Term deposits earn interest at a fixed rate for a fixed period. The total interest depends on the principal, rate, term, and compounding/payment frequency.
At Maturity
All interest is paid as a single lump sum when the deposit matures. For terms up to one year, this is simple interest: Interest = Principal × Rate × (Term/12). No compounding occurs as the interest is not reinvested.
Monthly / Quarterly / Annually
Interest is paid periodically. The balance compounds at each payment interval: FV = P × (1 + r/n)^(n×t) where n is the number of compounding periods per year. The total interest is FV − P.
Effective Annual Rate
The EAR lets you compare deposits with different compounding frequencies: EAR = (1 + r/n)^n − 1. A 5% rate compounded monthly has an EAR of 5.116% — slightly more than simple annual interest.
Financial Claims Scheme
Term deposits at Australian ADIs (banks, credit unions, building societies) are protected up to $250,000 per depositor per institution under the government's Financial Claims Scheme — making them one of the safest investments available.
Frequently Asked Questions
What is a term deposit?
A term deposit is a savings product where you lock in a fixed amount with a bank for a set period at a guaranteed interest rate. Your money is not accessible during the term without penalty, but you receive a guaranteed return — unlike variable savings accounts where rates can change.
What are current term deposit rates in Australia?
As of 2025, Australian term deposit rates for 6–12 month terms range from approximately 4.5–5.5% p.a. Longer terms can sometimes offer higher rates. Always compare across multiple institutions including online banks and credit unions.
What is the difference between interest at maturity and monthly interest?
Interest at maturity means all interest is paid as a lump sum at the end of the term. Monthly payments mean interest is paid during the term. If you reinvest monthly interest payments at the same rate, the effective return is similar; if you spend it, at-maturity pays more in total.
What is the effective annual rate?
The effective annual rate (EAR) accounts for compounding within the year. A 5% term deposit that compounds monthly has an EAR slightly above 5%. The EAR lets you compare deposits with different compounding frequencies on an equal basis.
Are term deposits safe?
Term deposits held with ADIs in Australia are protected by the government's Financial Claims Scheme (FCS) up to $250,000 per depositor per institution. This makes them one of the safest investments available, though returns are lower than growth assets like shares.