What to remember
- An annual rate must be adjusted for the deposit duration.
- Check after-tax returns and early-withdrawal terms.
- The insurance limit applies per bank, not per account.
Annual rate and duration
An annual rate does not mean you receive the full percentage on a three-month deposit. With simple interest, a shorter term reduces interest proportionally. Always check the bank’s day-count basis.
Compounding and tax
Compounding adds interest to the amount earning future interest. Payment to another account is not automatically compounding. The calculator accepts a tax assumption; enter the rate applicable to your situation.
Early withdrawal
A product may forfeit interest when closed early. If you may need access to your funds, request the exact withdrawal and automatic-renewal conditions before opening.
A six-month deposit example
Assume ALL 500,000 at a 2.00% annual rate for six months. With simple interest and an approximate half-year term, gross interest is 500,000 × 2% × 6/12 = ALL 5,000, not ALL 10,000. The amount you keep depends on applicable tax and fees. The bank may use actual days and its own day-count convention. Request the maturity amount and use the corresponding calculator assumptions.
Illustration, not a bank offer. These figures are assumptions used to explain the calculation.
What does deposit insurance cover?
ASD states that eligible deposits are insured up to ALL 2,500,000 per depositor per bank. Accounts at one bank are aggregated, including accrued unpaid interest; opening more accounts does not multiply the limit. Request the deposit insurance information sheet and check exclusions. Deposit insurance does not protect against exchange-rate changes.
Renewal does not guarantee the same rate
Record the maturity date and ask whether money returns to your account or renews automatically, and at what new rate. Consider how much you can leave untouched if a large expense is approaching. Request a written early-closure example, including treatment of interest already paid; terms differ between products.
Questions to take to the bank
Use this list when requesting your written offer.
- How much will I receive after tax and fees?
- What do I lose by closing early?
- Does it renew automatically, and at which rate?
- Is my deposit eligible for insurance?
Frequently asked questions
Do I receive a full year’s interest over three months?
No. Simple interest over three months is approximately one quarter of a year’s interest before tax and fees; the bank may calculate by days.
Is interest always added to the deposit?
No. It may be paid to another account. Ask whether it earns further interest or is simply available to spend.
Sources and examples
Links beside specific explanations identify their official sources. Worked examples are educational assumptions, not bank offers. The bank confirms the terms for your situation.