Savings account vs term deposit calculator

Use this handy calculator to find out which account pays more interest

Are you saving towards a specific financial goal like a round-the-world holiday or a deposit on a house?

Or maybe you’re just looking for an easy way to make your money work harder for you and to build your bank balance?

Whatever the reason you’re saving, you’ll want to open an account that pays a high rate of interest on the money you invest; but should you open a savings account or a term deposit? Our savings account vs term deposit calculator makes it easy to work out which account pays the most interest on your balance, so read on to find out how to use the calculator and start saving for the future.

How to use the calculator

The finder.com.au savings account vs term deposit calculator can help you form a clearer picture of which type of account is right for you. It’s quick and easy to use, with the entire process taking just a couple of minutes. All you have to do is:

  • In the “Saving Account Details” section, enter the amount of your initial deposit.
  • Next, enter the amount you will deposit into the account on a monthly basis. For example, if you plan to contribute $50 a month, enter “50” in the “Ongoing monthly deposit” box.
  • Enter the total amount of time (in months) that you will invest your money.
  • Select whether the interest rate you're receiving is an introductory rate or an ongoing rate.
  • If you select "introductory rate" enter the maximum variable rate and the standard variable rate that will apply to your account. If these figures are the same, then please select "ongoing rate". If you select "ongoing rate" then only one option will appear.
  • Enter the number of months in which you will earn the bonus interest rate.
  • Moving to the “Term Deposit Details” section on the right-hand side, enter your initial deposit. Please note that these are usually fixed due to the nature of a term deposit.
  • Enter the investment period (in months)
  • Enter the interest rate (paid at maturity) that is applied to your account
  • Click “Calculate your results”. The interest you could earn from a savings account and a term deposit will be displayed at the bottom of the calculator.
  • Compare the results to help you decide which account represents a better option for you.

What does each field mean?

Unsure of what any of the fields in the calculator mean? Read on for an explanation of the terms used.

Saving Account Details

Initial deposit

This is the amount you will deposit into the account once you open it.

Ongoing monthly deposit

The ongoing deposit is the amount you plan to transfer into your savings account on a regular basis.

Investment period

This is the amount of time (in months) that you plan to invest your money. You might have a specific deadline for a particular savings goal, or you may simply want to compare what savings account vs term deposit balances will look like in several years’ time.

Maximum variable rate

This is the maximum interest rate it is possible for you to earn on your savings balance. Bonus saver accounts and reward saver accounts allow you to earn bonus interest on top of the standard variable rate when you satisfy specific conditions, such as depositing a minimum amount each month and limiting your withdrawals. If you don’t have an account that allows you to earn bonus interest, then choose "ongoing rate".

Standard variable interest rate

This is the standard interest rate that applies to your savings balance when you do not earn any bonus interest.

Bonus period

This refers to the number of months in which you satisfy the conditions necessary to earn bonus interest on your savings balance. If your account doesn’t offer bonus interest, enter “0” in this field.

Term Deposit Details

Fixed deposit

In this field you need to enter the amount of money you will deposit in your account.

Investment period

This refers to the period of time (in months) that you will invest your funds in a term deposit.

Fixed interest rate

This is the fixed interest rate that will apply to the balance of your term deposit for the duration of the investment period.


Savings accounts vs term deposits: what’s the difference?

A savings account is a bank account that lets you earn interest on your balance at a variable rate. Interest rates tend to fluctuate in line with changes to the Reserve Bank of Australia’s official cash rate, and you can usually access the funds in your account whenever you wish.

There’s a wide range of savings accounts to choose from, including high-interest savings accounts, online savings accounts and even accounts that pay bonus interest.

The main advantages of savings accounts are that they pay a high rate of interest and they usually allow you to withdraw and deposit funds whenever you want. However, the downside is that if interest rates fall, the interest-earning capacity of your account will also drop.

Meanwhile, a term deposit lets you invest a specific amount of money for a set period of time, such as 6, 12 or 24 months. During that time, the money you invest earns interest at a fixed rate. Interest is typically paid monthly, annually or when the deposit matures, but you can’t access the funds in your account until the term ends.

The main advantage of a term deposit is that it’s a safe and secure way to invest money. There’s no risk of dipping into your savings and eating away at your account balance and you won’t be affected by any interest rate falls.

However, if interest rates rise you won’t be able to take advantage of this increased earning capacity until your deposit matures. There’s also the drawback that if you come into some extra money halfway through the term, you won’t just be able to add it to your balance in the same way as you would with a savings account.

When should I open a savings account?

If you want to maximise your earning power and enjoy easy access to your funds at the same time, you should consider opening a savings account. Most savings accounts allow you to deposit and withdraw money whenever you need, so you can manage your everyday spending or top up your account whenever you wish.

There are also special types of savings accounts to suit different types of savers. For example, reward saver accounts encourage you to regularly squirrel away money by paying a higher rate of interest to customers who limit their withdrawals and deposit a minimum amount each month. This can be a great incentive for those who have a specific goal they are saving towards.

However, if you’re the type of person who is regularly tempted to dip into your savings and go on a spending spree, you may want to consider a term deposit.

When should I open a term deposit?

You should consider opening a term deposit if you want a risk-free savings opportunity and the security of guaranteed returns. When you invest money in a term deposit, you will be able to work out exactly what your balance will be when the deposit matures in 6, 12 or however many months.

Another benefit of term deposits is the protection they provide against falling interest rates. If rates are predicted to drop further in the coming months or years, locking your money away in a term deposit with a high interest rate could be a wise decision.

Case study: Callum calculates his savings power

Callum has $5,000 to invest and wants to find out whether he will earn more interest with a savings account or with a term deposit. With an investment timeframe of two years, Callum compares the following accounts:

  • Account A: A bonus saver account that has a standard variable rate of 2.50% p.a. but pays an extra 1.00% p.a. bonus interest every month that Callum makes a certain number of purchases using a linked transaction account. This would allow Callum to earn a maximum variable rate of 3.50% p.a., and let’s assume that he does this in 18 out of the 24 months that he plans to invest his funds. The standard variable rate of 2.50% p.a. applies for the remaining six months.
  • Account B: A term deposit that pays a fixed interest rate of 3.00% p.a. for 24 months.

Callum enters the relevant account details into the savings account vs term deposit calculator and discovers that he can earn more interest with the savings account. It pays $335.32 interest while the term deposit pays $308.79, a difference of $26.53.

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