Australian Term Deposit Calculator

How term deposit interest is actually calculated

Most Australian term deposits earn simple interest: Interest = Principal × Rate × Time. On A$50,000 at 4.5% p.a. for 12 months, that's A$50,000 × 0.045 × 1 = A$2250.00, paid out at maturity alongside your original deposit for a maturity value of A$52250.00. This is confirmed by multiple banks directly: Suncorp states "unlike savings accounts where the interest compounds — term deposits earn simple interest and provide no capital growth," and CommBank notes "while some term deposits come with compound interest, most come with simple interest." Term deposits do not automatically compound the way a savings account does.

At maturity vs. periodic payments: the compounding trade-off

Compounding on a term deposit only happens if you choose periodic interest payments (monthly, quarterly or annually) and leave each payment in the account to be reinvested, rather than paying it out. On the same A$50,000 at 4.5% p.a. over 24 months: paid at maturity (simple), you earn A$4500.00 for a maturity value of A$54500.00. Paid annually and reinvested (compound, A = P × (1 + r)²), you earn A$4601.25 for A$54601.25 — A$101.25 more, about 2.2% extra interest over the term.

That gain is real but modest — and Canstar's own analysis flags the catch: "banks generally offer a lower rate of interest on term deposits that pay interest at regular intervals, and this has the effect of offsetting the impact of compound interest." A periodic-payment product advertised at a lower headline rate can end up paying less overall than an at-maturity product at a higher rate, even after compounding. Always compare the actual rate offered for each payment option, not just the payment frequency.

The tax banks don't show you

Every bank calculator and comparison site in a search for "term deposit calculator" shows only the gross, pre-tax return. Term deposit interest is assessable income in Australia — taxed at your marginal rate plus the 2% Medicare levy in the year it's credited, whether you withdraw it or leave it in the account. Take the A$50,000-at-4.5%-for-12-months example: A$2250.00 gross interest, taxed at a 32% combined rate (30% bracket + Medicare), costs A$720.00 in tax — leaving A$1530.00 net.

That turns a 4.5% p.a. headline rate into an effective after-tax yield of 3.06% — a full 1.4% percentage points lower than advertised. At the top 45%+2% Medicare bracket, the same deposit's effective yield drops even further. This gap between the advertised rate and what you actually keep is the single biggest thing missing from every bank and comparator term deposit calculator — this tool puts it front and centre.

If you haven't given the bank your TFN

If you don't provide a Tax File Number (or ABN, or a valid exemption) to your bank, it is legally required to withhold tax from your term deposit interest at the top rate of 47% once your annual interest exceeds A$120 (45% resident + 2% Medicare levy equivalent), or 45% for a foreign resident. On the A$50,000-at-4.5%-for-12-months example, that's A$1057.50 withheld before you ever see the interest — even if your real marginal rate is much lower.

This withholding is a PAYG cash-flow mechanism, not your final tax bill — it's reconciled at tax return time against your actual marginal rate, and residents can claim back any amount over-withheld. But it's a real, avoidable trap: providing your TFN takes minutes and stops the bank withholding money you don't legally owe.

Market rate context (as of 9 July 2026)

The RBA cash rate stood at 4.35% p.a. as of 9 July 2026. Best advertised term deposit rates seen at that time: around 4.95%–5.45% p.a. for 6-month terms, 5.05%–5.55% p.a. for 12-month terms, and 5.4%–5.55% p.a. for 24-month terms, sourced from Canstar, Infochoice and money.com.au rate comparisons. Very short terms (1–5 months) typically pay materially less at the major banks. These are dated, third-party market snapshots, not live feeds or Calcuris's own rates — they move regularly, so always check the current rate directly with the bank before locking in a term.

Breaking a term deposit early

Most Australian term deposits lock your money away for the full term. Breaking one early is usually possible but comes at a cost: banks commonly require 31 days' notice for early withdrawal, may apply an interest rate reduction (sometimes to a much lower "early withdrawal" rate) on some or all of the funds withdrawn, and can charge an early withdrawal adjustment or fee on top. Some products don't allow early access at all except in cases of severe financial hardship. Read the product disclosure statement before you deposit if there's any chance you'll need the funds before maturity — a slightly lower rate on a shorter term is often cheaper than breaking a longer one.