The
calculator shows you how much interest you should earn on a fixed or term
deposit at a bank and the final value of your deposit. It depends
on two factors: the annual interest rate e.g. 10% p.a. and also the
number of 'periods' (times per year) that the capital plus interest is
compounded. This varies between banks who should publish their
interest rate policy, but it is often left up to the customer to confirm this.
'Simple
interest' is a single addition of the annual rate e.g. $100,000 at 10% p.a. would
earn
$10,000 interest the first year, balance $110,000. Second year $110K
becomes $121K etc.
Most if not
all banks
pay compound interest, either halfyearly (2 periods or biannually)
quarterly (4 times) monthly (12 times) or even daily (365 times per year). The
accumulated value or balance of the deposit increases each period; therefore the
more compounding periods used, the more interest will accrue over the year as interest
is earned on the aggregated balance.
The increase in accrual between annual and daily balance compounding becomes noticeable on
larger deposits and the number of years the account is left to accumulate.
Example.
A
$100,000 deposit at 10% with monthly balance compounding adds 1/12th of 10% to the
balance each
month, resulting in $110,471 after one year. With
daily compounding it rises to $110,515. On $1 million the difference would be
$5,000 which increases each year the money is left on deposit.
Check
examples with
the calculator, then use your own figures to see the amount of interest that a fixed term deposit will earn
for different periods and then compare them with the bank's.
Do not use commas or $
£
€
symbols
(the currency name is immaterial). You can ignore the taxation or inflation factors
by leaving the fields at 0 (zero). To convert currency instantly, use the table
below or visit the CurrencyOnline website. 
NOTE THAT THE VALUES APPLY
TO ANY CURRENCY
