Savings Account Calculator Australia

Compound Interest Formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Principal Amount (P):

AUD

Annual Interest Rate (r):

Compounding Frequency (n):

Time Period (t):

years

Future Value (FV):

Total Interest Earned:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It's often referred to as "interest on interest" and can help savings grow at a faster rate compared to simple interest, which is calculated only on the principal amount.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ FV = P \times (1 + \frac{r}{n})^{(n \times t)} \]

Where:

\( FV \) — Future value of the investment (AUD)
\( P \) — Principal investment amount (AUD)
\( r \) — Annual interest rate (decimal)
\( n \) — Number of compounding periods per year
\( t \) — Time the money is invested for (years)

Explanation: The more frequently interest is compounded, the greater the return on your savings. This calculator helps you understand how different compounding frequencies affect your savings growth.

3. Importance of Savings Calculation

Details: Understanding compound interest is crucial for financial planning. It demonstrates how regular savings can grow over time and helps in setting realistic financial goals for retirement, education, or major purchases.

4. Using the Calculator

Tips: Enter your principal amount in AUD, annual interest rate as a percentage (rates up to 5.05% as of September 2025), select compounding frequency, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest.

Q2: How often do Australian savings accounts compound interest?
A: Most Australian savings accounts compound interest daily and pay it monthly, but this can vary between financial institutions.

Q3: Are savings account interest rates guaranteed?
A: No, interest rates can change over time. The rates shown are indicative and may vary based on market conditions and the specific financial institution.

Q4: Are there taxes on savings account interest?
A: Yes, interest earned on savings accounts is generally considered taxable income in Australia and must be declared on your tax return.

Q5: What's the best compounding frequency for savings?
A: Generally, more frequent compounding (e.g., daily) results in higher returns, but you should also consider the interest rate and any account fees.