Compound interest calculator
Enter your lump-sum deposit amount, annual interest rate and saving term in months to compare total interest earned and the effective yield rate across annual, monthly and daily compounding.
How to use the compound interest calculator
- Enter your deposit amount
Type the lump-sum principal you're placing in the account (defaults to $100,000). This calculator models a single upfront deposit without ongoing top-ups.
- Set the interest rate
Enter the nominal annual interest rate offered by your bank or term deposit (defaults to 3.00%). The calculator holds this rate fixed for the entire term.
- Choose the saving term
Select or type your saving term in months (defaults to 24 months) to compare annual, monthly and daily compounding side by side.
If you want to include weekly, fortnightly or monthly contributions on top of your starting balance, use the savings calculator instead.
The results table shows your total interest earned and effective annual yield rate under three scenarios: interest compounded annually, monthly and daily. The compound interest chart plots how each compounding frequency grows over your chosen term.
What this compound interest calculation covers
Included
- Single lump-sum deposit amount
- Saving term measured in months
- Annual, monthly and daily compounding
- Total interest for each frequency
- Effective annual yield rate comparison
Not included
- Ongoing weekly, fortnightly or monthly deposits
- Account keeping fees or early withdrawal penalties
- Income tax or non-resident withholding tax
- Interest rate changes during the saving term
- Foreign exchange swings on overseas cash balances
What visa holders and expats should know about lump sums
If you're holding a lump sum toward a property purchase, lenders care as much about the paper trail as the interest earned. Documented overseas transfers, family gifts, genuine savings and existing equity can all form part of your deposit, provided your bank statements clearly track the funds from source to settlement.
For Australian expats and borrowers who already hold an Australian mortgage, placing a cash buffer in a home loan offset account cuts loan interest calculated daily rather than generating taxable deposit interest. During your Free Lending Assessment, we check which of our 31+ lenders fit your deposit source and visa.
Frequently asked questions on compound interest
Why is the yield rate higher than the nominal interest rate?Short answer: Compounding within the year
Compounding within the year. When interest compounds monthly or daily, each interest payment is added to your deposit balance and earns interest in the next period. The yield rate (also called the effective annual rate) shows your actual annual return once that interest-on-interest effect is included. With annual compounding, the yield rate equals the nominal rate.
Does daily compounding earn much more than monthly compounding?Short answer: Slightly more over time
Slightly more over time. Moving from annual to monthly compounding produces the main jump in total interest, while moving from monthly to daily compounding adds a smaller extra gain. On a $100,000 deposit at 3.00% over 24 months, the calculator shows the exact dollar difference between annual, monthly and daily compounding.
Is a lump sum better in a savings account or a mortgage offset account?Short answer: Usually an offset account
Usually an offset account if you already have a home loan. Home loan interest is calculated daily and the rate is typically higher than a savings account rate. Every dollar in an offset reduces the loan balance you're charged interest on without creating taxable interest income, which helps Australian expats and higher-tax borrowers.
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Written & reviewed byCraig Vaughan, Director & Mortgage Broker
MFAA 47419Credit Representative 376082Last reviewed
Authorised under LMG (ACL 517192). AFCA member 121620.