Example: Steve chooses a term deposit
As a make-believe example, let's pretend 32-year-old tradie Steve wants to invest $10,000 in a 5-year term deposit. Let's say when he compares the accounts available from the 2 banks of which he is already a customer, Steve discovers a slight difference in the interest rates on offer – Bank A offers 2.75% p.a. while Bank B offers 3.25% p.a. Both accounts pay interest monthly, so Steve compares the accounts to see just how much difference a higher rate will make to his end balance.
As you can see, even though the interest rate from Bank B is only 0.50% p.a. higher, this works out to be a difference of $289.69 at the end of the investment term.
* This is a fictional, but realistic, example.