Compound Interest Calculator
Free compound interest calculator with monthly contributions, inflation adjustment, and tax-on-interest modelling for high-interest savings accounts and term deposits.
Future value
$47,527
Growth over time
| year | Deposits | Interest | Balance |
|---|---|---|---|
| 1 | $2,400 | $567 | $12,967 |
| 2 | $2,400 | $719 | $16,087 |
| 3 | $2,400 | $879 | $19,365 |
| 4 | $2,400 | $1,047 | $22,812 |
| 5 | $2,400 | $1,223 | $26,435 |
| 6 | $2,400 | $1,408 | $30,243 |
| 7 | $2,400 | $1,603 | $34,246 |
| 8 | $2,400 | $1,808 | $38,454 |
| 9 | $2,400 | $2,023 | $42,877 |
| 10 | $2,400 | $2,249 | $47,527 |
For estimation purposes only. Actual returns and tax treatment depend on your specific bank, your total taxable income, and your personal tax situation — consult a financial adviser.
How compound interest works
Compound interest is interest paid on your original deposit plus all the interest already credited to your balance, so your money grows faster the longer it's left to compound. Depositing A$10,000 into a high-interest savings account paying 5% a year, compounded monthly, and adding A$200 every month doesn't grow at a constant pace — later years compound on a much bigger base than the first year, so growth accelerates over time.
How often that compounding happens — the compounding frequency setting in this calculator — matters too. Monthly compounding pushes your effective annual rate slightly above the quoted nominal rate, because interest credited partway through the year starts earning interest of its own for the rest of that year.
How interest is taxed in Australia
Unlike some countries, Australia has no separate tax-free allowance for savings interest — every dollar of interest you earn on a high-interest savings account or term deposit is assessable income and must be added to your tax return, taxed at your full personal marginal rate alongside your salary and other income, according to the ATO's guidance on investing in bank accounts and income bonds (ato.gov.au/individuals-and-families/investments-and-assets/investing-in-bank-accounts-and-income-bonds).
One detail that catches many savers out: if you don't give your bank your Tax File Number (TFN) — or claim a TFN exemption — the bank is required to withhold tax from your interest payments at the top withholding rate (47%, combining the top marginal rate and Medicare levy), rather than at your actual marginal rate. Providing your TFN avoids this and lets the correct amount be settled through your normal tax return instead.
This calculator's 'Taxable savings account' setting uses 32.5% as a representative middle-income marginal rate, but your real tax bill depends on your total assessable income for the year — someone on a lower income will pay less, and a higher earner will pay more.
Term deposits, savings accounts, and superannuation are different things
This calculator models everyday savings — high-interest savings accounts and term deposits — not superannuation. Super is a separate, concessionally-taxed retirement savings system with its own contribution caps and a much lower tax rate on earnings inside the fund, so the after-tax outcomes shown here don't apply to super balances. A term deposit locks your rate in for a fixed term (commonly three months to five years) and typically requires notice or an interest penalty to withdraw early, while a high-interest savings account stays fully at-call but its rate can move at any time.
Example: A$10,000 plus A$200 a month at 5% for 10 years
Starting with A$10,000, contributing A$200 a month, at a 5% annual rate compounded monthly, this calculator projects a future value of A$47,527 after 10 years — A$34,000 of that from your own deposit and contributions, and A$13,527 from interest. Monthly compounding lifts the effective annual rate to 5.12%. At 5%, a lump sum by itself would take about 13.9 years to double.
Example: the same A$10,000 with no top-ups
The same A$10,000 at 5% compounded monthly, with no ongoing contributions, grows to A$16,470 after 10 years — A$6,470 of that being interest. Comparing this to the A$47,527 result above shows just how much of the total comes from regularly adding A$200 a month rather than from the original deposit alone.
Australian savings and term deposit rates track the RBA cash rate closely, so both have moved up and down together in recent years — always check whether an advertised 'high-interest' rate is an introductory bonus rate that reverts to a lower ongoing rate after a few months, since providers commonly structure their headline rates that way.
