How to use
The page has three tabs.
- Deposit: one lump sum left for a fixed term, like a certificate of deposit (CD), a term deposit or a fixed-rate bond. Enter the principal, the annual rate, the term in months and the interest type.
- Monthly savings: the same amount paid in every month, like a regular saver account or a recurring deposit. Enter the monthly deposit, the annual rate, the term in months and the interest type. The calculator assumes each payment goes in on the same day of the month.
- Compound: a starting amount plus an optional monthly addition, grown at an annual rate for a number of years. Enter the starting amount, the monthly addition (0 is fine), the annual return, the term in years and how often interest is compounded.
Amounts can be in any currency. The calculator works in whole units, so results are rounded to the nearest whole dollar, euro, pound or whatever you use, with no cents.
On the Deposit and Monthly savings tabs you also pick a tax option:
- Tax-free 0%: no tax is taken off. Use this for tax-sheltered accounts, or when you want the figure before tax.
- Custom: type your own rate. Use this if your bank withholds tax on interest, or if you want to estimate the tax at your own rate.
- Korea standard: South Korea’s standard withholding rate on interest, 15.4%. This only applies to accounts held in Korea.
The Deposit and Monthly savings tabs show the interest before tax, the tax, the interest after tax and the amount at maturity. The Compound tab shows the final balance before tax and a year-by-year table.
When it helps
- Checking what a CD or savings account will actually pay at the end of the term, from the advertised annual rate
- Comparing putting money in all at once with paying in a little each month
- Seeing why a regular saver at a high headline rate earns less than you expected
- Picturing how a starting sum plus monthly additions could grow over 10 or 20 years
Typical example: 10,000 in a 12-month deposit at 3.5%, simple interest, tax-free, earns 350 and pays out 10,350 at maturity.
Reading the result: “Interest after tax” is the money you gain. “Amount at maturity” is what you paid in plus the interest after tax. On the Monthly savings tab, “Total paid in” is all of your monthly deposits added together.
How it works
- Deposit, simple interest = principal × annual rate × months ÷ 12
- Monthly savings, simple interest = monthly deposit × (annual rate ÷ 12) × n(n + 1) ÷ 2
- n is the number of months.
- The first payment earns interest for n months and the last one for just 1 month. The formula adds all of these up.
- Monthly compounding: each month’s interest is added to the balance, and the next month’s interest is worked out on the larger balance.
- Compound tab: interest is added to the balance once a year or once a month, depending on the option you pick. Monthly additions join the balance and earn interest from then on.
- On the Deposit and Monthly savings tabs, interest is rounded to the nearest whole unit and tax (interest × tax rate) is rounded down.
- Tax is charged on the interest only, never on the money you paid in.
- The Compound tab does not calculate tax. It does not round along the way, only when it shows the result.
This is the plain textbook method. Banks quote rates in different ways. In the US, for example, accounts usually advertise an APY (annual percentage yield), which already includes the effect of compounding. If you enter an APY as the annual rate and choose monthly compounding, the result will be slightly higher than the bank’s figure. Choose simple interest instead to match an APY over 12 months.
Examples
Deposit of 10,000 at 3.5% for 12 months, tax-free
| Interest type | Interest | Amount at maturity |
|---|---|---|
| Simple | 350 | 10,350 |
| Monthly compounding | 356 | 10,356 |
The same deposit with a tax rate
| Tax option | Tax | Interest after tax | Amount at maturity |
|---|---|---|---|
| Tax-free 0% | 0 | 350 | 10,350 |
| Custom 24% | 84 | 266 | 10,266 |
- 24% is just an example of what a custom rate does. It happens to match one of the US federal income tax brackets. Your own rate depends on where you live and on your income.
- Most banks in the US and the UK pay interest without taking tax off, and you settle the tax later on your tax return. If that is your case, choose Tax-free 0% to see what the bank pays, and treat the custom rate as a rough estimate of the tax you will owe.
Monthly savings of 1,000 at 4% for 12 months, tax-free
| Interest type | Total paid in | Interest | Amount at maturity |
|---|---|---|---|
| Simple | 12,000 | 260 | 12,260 |
| Monthly compounding | 12,000 | 263 | 12,263 |
- Over one year the difference between simple and monthly compounding is just 3.
An “8%” regular saver: 1,000 a month for 12 months, simple interest
- You pay in 12,000 in total and earn 520 in interest, not 960 (8% of 12,000).
- Only the first payment earns a full year of interest. The last payment earns one month. Over 12 months, a monthly savings plan earns about half the interest of a deposit at the same rate (13/24, to be exact).
- That is why a high-rate regular saver often pays less than an ordinary deposit at a lower rate. A 12,000 deposit at 4% for a year earns 480, close to the 520 above.
Compound tab: starting amount 10,000, no monthly addition, 5% a year, 10 years
- Compounded yearly, the balance after 10 years is 16,289.
- Compounded monthly, it is 16,470.
Compound tab: starting amount 10,000, plus 300 every month, 5% a year, 10 years, monthly compounding
- Over 10 years you put in 46,000: the starting 10,000 plus 36,000 in monthly additions.
- The balance after 10 years is 63,249, before any tax.
South Korea only: standard withholding tax
The same 10,000 deposit at 3.5% for 12 months, with the Korea standard rate of 15.4%:
| Interest type | Interest | Tax | Interest after tax | Amount at maturity |
|---|---|---|---|---|
| Simple | 350 | 53 | 297 | 10,297 |
| Monthly compounding | 356 | 54 | 302 | 10,302 |
Edge cases
- A small difference from your bank: banks may count interest by the day (for example, days held ÷ 365) and round in their own way. This calculator counts in months and in whole units, so its figure can differ from your bank’s by a little.
- Whole units only: there are no cents. On a small deposit the rounding is easy to see. A tax of 53.9 shows as 53, because tax is rounded down.
- APY versus interest rate: see “How it works” above. If your bank quotes an APY, use simple interest for a 12-month term.
- Tax-free means the tax is 0.
- One account at a time: the tax shown is the tax on this one account at the rate you chose. Your real tax bill depends on all of your income and on the rules where you live.
- Monthly savings versus deposit: the same 12,000 earns less in a savings plan than in a deposit, because later payments are in the account for less time.
- Limits: the annual rate can be 0% to 30%, the term 1 to 120 months on the Deposit and Monthly savings tabs and 1 to 50 years on the Compound tab, and a custom tax rate up to 50%.
Frequently asked questions
Will I get exactly this amount?
No, treat it as an estimate. The result comes from the numbers you enter and the assumptions described above. What you actually receive, and the tax on it, follow your bank’s own calculation. Check the figures your bank gives you before you open an account.
What is the difference between simple interest and monthly compounding?
With simple interest, interest is worked out only on the money you put in. With monthly compounding, each month’s interest is added to the balance and earns interest too. In the deposit example above, the gap is 350 against 356. It grows with higher rates and longer terms.
Why does my monthly savings plan earn less than the advertised rate?
The annual rate is what money earns if it stays in the account for a full year. In a monthly savings plan, each payment stays for a different length of time, so the rate is not applied to the whole amount you paid in. In the 8% example above, 12,000 paid in over a year earns 520, not 960.
Which earns more, a deposit or a monthly savings plan?
At the same rate, a deposit earns more, because all of the money is working from the first day. In the examples above, 12,000 in a deposit at 4% earns 480 over a year, while 1,000 a month at 4% earns 260. If you do not have a lump sum yet, you can save monthly first and then move the total into a deposit. Use both tabs to compare.
Which tax option should I choose?
It depends on your country and your account. Many banks pay interest in full and leave the tax to your tax return. In that case Tax-free 0% shows what you receive, and a custom rate gives a rough idea of the tax. If your bank withholds tax, enter that rate as a custom rate. Korea standard is only for accounts held in South Korea.
Where does the Korea standard rate come from?
It is South Korea’s withholding tax on interest income: 14% income tax under Article 129 of the Income Tax Act, plus local income tax of 10% of that income tax under Article 103-13 of the Local Tax Act. Together they make 15.4%. The calculator keeps this rate in a reference table and updates the table and this page together when the law changes. Lower rates for special Korean accounts are not built in. Enter them as a custom rate.
Is the Compound tab result before or after tax?
Before tax. The Compound tab does not take tax off, and it assumes the same return every year. Real investments go up and down.
This page explains a general calculation method. It is not personal tax, financial or investment advice. Before you open an account, check the rate and the after-tax amount your bank or provider gives you.
Data source
The Korea standard rate is South Korea's withholding rate on interest income: income tax under Article 129 of the Income Tax Act, plus local income tax under Article 103-13 of the Local Tax Act. The exact figures are in the explanation on this page. The rate is kept in a reference table and checked against the law. Lower rates for special Korean accounts are not built in. Enter them as a custom rate.
- Last checked
- Income Tax Act, Article 129 (Korean National Law Information Center) (opens in a new tab)
- Local Tax Act, Article 103-13 (Korean National Law Information Center) (opens in a new tab)
Found a calculation mistake? Let us know.