Term Deposit Calculator

Wondering what the future value is of your term deposit?
Enter your intial investment term deposit amount, then rate and term to see how much compounding interest your term deposit might earn.

Term deposit interest calculator

This term deposit calculator is for information and illustrative purposes only and does not provide financial advice. The calculation is based on compounding interest being paid out at the end of the term (maturity) not paid out during the term. It does not consider applicable costs, taxes (including resident withholding tax) and charges.
Please note that interest rates are subject to change.
We recommend seeking financial advice about your situation and goals before getting a financial product.

What is a term deposit?

A term deposit is a fixed rate, fixed term investment – which means you lock your money away for a predetermined amount of time, to earn a predetermined amount of interest.

It’s a low risk savings strategy and also a good, low maintenance way to maintain a long-term savings plan. It can also be handy if you’re guilty of splashing cash around when your budget doesn’t really allow it. Locking your money away in a term deposit can be a great way to break that habit – the hefty penalty fee for withdrawing early might inspire you to keep your hands off your savings stash!

What is a good term deposit rate?

Banks’ term deposit rates can fluctuate, often in line with the Reserve Bank of New Zealand’s official cash rate, and vary from bank to bank. 

A term deposit with a reasonable rate should be competitive compared to other products in the market and meet your needs. In addition to the interest rate, it’s important to consider when you’re willing to invest your money and how often the interest is paid. By factoring in these considerations, you can make an informed decision and choose the best term deposit option.

If you are considering a term deposit, consider comparing its interest rate with savings accounts, another popular cash deposit product. If you plan to lock your money away for a specific period, ensure that the interest rate on the term deposit is higher than what you could earn with a high-interest savings account. However, remember that some savings accounts have restrictions to earn the highest interest rate.

How long do you have to put money in a term deposit for?

When you put your money in a term deposit, you agree to leave it untouched for a specific time, which usually varies from one month to five years. You might be subject to early withdrawal fees or interest penalties if you withdraw the money before the term ends.

What are the cons of investing in Term Deposits?

Lower returns than high-risk investments

High-risk investments can be attractive to many people due to their potential for high returns. However, a Term Deposit offers security, although the return may be lower than other higher-risk investments. The return you receive will depend on the size and length of your investment. It’s worth researching different financial institutions and their respective interest rates to maximise your investment returns. A Term Deposit calculator can also be a helpful tool to understand your options better.

Inflation risk

It is important to note that Term Deposits may not always keep up with inflation. It’s worth noting that even if the interest rates on your Term Deposits increase while your investment is active, you may not reap the benefits if inflation is high. It’s especially important to remember this if you intend to keep your funds locked in for more than 12 months.

Your funds are locked away for a fixed term.

Life can change in a flash. Suppose all your funds are locked away in a Term Deposit, and you must access cash before the term ends. In that case, you will likely receive a partial benefit of the interest earned. You could incur additional costs or pay back previously accumulated interest to the financial institution.

Term Deposit Calculator terms to know

Initial deposit:

The starting balance for your term deposit.

Term length:

The amount of time you need to hold your term deposit. You’ll generally earn a fixed APY during that term.

Interest rate:

The base rate at which your deposit earns money.

Annual percentage yield (APY):

The percentage that indicates how much interest a bank account earns in one year.

Compounding Interest:

Your earnings are added to your balance. And that interest earns interest.

Early withdrawal penalty:

The early withdrawal penalty for your term deposit if you terminate the deposit before maturity

How to calculate your term deposit earnings

Because term deposits generally have a fixed annual percentage yield (APY), you can get a reasonably accurate calculation of how much you’ll earn when your term deposit matures. 

However, an early withdrawal penalty can reduce earnings if you withdraw your funds before the term deposit matures.

Learn how much interest you can earn with the LifeCovered term deposit calculator by following these steps:

  1. Determine the amount you want to invest in a term deposit, but be mindful of early withdrawal penalties. Choose your term carefully.
  2. Deposit the amount you wish to invest as your initial term investment deposit. 
  3. Enter the number of months or years for the term deposit.
  4. Finally, add the term deposit’s annual interest rate. 
Term Deposit Calculator

Top Term Deposit Rates

In this high-interest and high-inflation rate environment, you should get term deposit rates from banks and credit unions above inflation. For instance, the bank and credit union 12-month term deposit rate is, on average, 6.00% APY.

Frequently Asked Questions

Is term deposits worth it?

Yes, term deposits are a safe way to invest money with minimal risk, and returns are usually higher than inflation. You may earn more return on investment by investing in shares and property.

What are the tax rates on term deposits in NZ?

The tax rate on term deposit interest you earn, Resident Withholding Tax (RWT), is based on your taxable income.
There are different rates for individuals, trusts, companies and partnerships.

RWT Tax Rates Who should use this rate
  • Individuals who have a reasonable expectation of their annual income being $14,000 or less* if they’ve provided their IRD number. 
  • Testamentary trusts may elect this rate if they provide their IRD number
  • Individuals whose annual income is from $14,001 to $48,000* if they’ve provided their IRD number.
  • Individuals, Māori authorities and trusts who have not elected a rate but have provided their IRD number (if they have not opened a new account since 31 March 2010). 
  • Trusts and testamentary trusts may elect this rate if they’ve provided their IRD number.
  • Companies may elect this rate if they’ve provided their IRD number
  • Individuals whose annual income is from $48,001 to $70,000* if they’ve provided their IRD number.
  • Trusts and Māori authorities can elect this rate if they’ve provided their IRD number
  • All interest recipients can elect this rate. They must provide their IRD number to choose this rate.
  • Individuals whose annual income is $70,001 to $180,000* 
  • Use this rate for all interest recipients who open a new account after 31 March 2010 who do not elect a rate.
  • All interest recipients can elect this rate, for example, individuals whose annual income is $180,001 or over*
  • For all interest recipients who have not provided their IRD number

How is interest calculated on a term deposit?

When you invest in a term deposit, the interest rates offered by the bank may vary based on various factors, such as the bank you choose, the amount you invest, and the duration of your investment.

It is important to note that term deposit rates are fixed, which means the interest rate stays the same throughout the term, regardless of market fluctuations, ensuring a consistent return.

Who offers term deposits in New Zealand?

While it might have made sense in the past to head to big banks for term deposit options, the market has come a long way.

You can open a term deposit with New Zealand’s leading banks, credit unions, and online challenger banks.

That’s why it’s important to take the time to shop around and compare term deposits to guarantee you’ll be getting the best bang for your buck for your investment.

Is my money safe in a term deposit?

The Government Deposit Takers Act will apply to all licensed term deposit providers in New Zealand.

The Act planned to come into effect by mid-2025, aims to introduce a new scheme called the Depositor Compensation Scheme (DCS), which will give depositors confidence that their deposits will be eligible for compensation of up to $100,000 per depositor per institution in case of a deposit taker failure.

Author: Willi Olsen

Willi has worked in the insurance industry since 2004, accumulating a wealth of knowledge broadly across all aspects of insurance and financial protection, as well as as a business owner.

The New Zealand Certificate in Financial Services (NZCFS Level 5) in Life, Health, and Disability and the (NZCFS Level 5) Investments strand back up this practical experience.