RateCity.com.au
  1. Home
  2. Savings Accounts
  3. Savings accounts calculator

Savings interest rate calculator: How much interest can you earn?

How fast can your savings grow with regular deposits? Find out how much interest you can earn with RateCity's Savings Account Calculator.

Mark Bristow
Mark Bristow

Personal Finance Editor

Content updated

Product data updated

$
%
$

The result provided is an estimate only. Please read our Calculator Assumptions and Disclaimer for more information.

Your savings at the end of the term would be

$0

Total interest earned

$0

What is a savings calculator?

A savings calculator is an online tool that estimates how fast your savings could grow in a savings account.

To use our interest calculator, all you have to do is follow a few steps:

How to use a savings interest rate calculator

  1. Enter your initial deposit amount: Every savings account starts with a deposit, whether that’s $1 or $10,000 or more. Enter what you'll start your savings account with here.
  2. Enter your regular deposits: While interest can help your savings grow, a savings account should ideally be topped up regularly with more money. Enter how much you'll add to your account, and how frequently you can make these deposits (weekly, monthly or fortnightly).
  3. Enter your savings period: How many months or years do you want to save for? This field will help the calculator determine how much interest you could receive over your selected length of time.
  4. Enter the interest rate: The calculator’s default interest rate is the current average savings account interest rate on the RateCity database. There can often be a world of difference between an average rate and a market leading rate, so you might want to play around with this field to see what different rates will do to your savings.

Based on the information you enter, the calculator will then estimate: 

  • Your estimated final balance.
  • The total interest earned over your elected savings period.

Using this savings calculator, you can compare different scenarios (e.g different deposit sizes and saving periods) and see how your savings could be affected.

Note that this calculator is designed to help you work out the total interest you could earn on your savings in a specified period. It is not intended to be relied upon for making any decision regarding a financial product. Calculations assume that details entered into the calculator, including interest rates, do not change for the savings period.

It's advisable to carry out independent research to find a financial product that suits your needs or seek financial advice from a licensed expert instead of solely relying on the results obtained through this calculator.

What's the difference between a savings account and a transaction account?

Most savings accounts let you earn interest on the money you deposit and grow your wealth. A transaction account simply gives you easy access to your funds for everyday spending, such as through online banking or via a debit card.

How is interest calculated on savings?

The deposits in your savings account generally earn compound interest. This is where you earn interest on your initial deposit amount, and also interest on your interest income. 

Simply put, the interest you earn is added to your account balance, and each time interest is calculated, it is done so on the larger amount – so that you earn more interest each time. 

This is different from simple interest, where you only earn interest on the initial amount you’ve invested. Given the same starting deposit amount and interest rate, compound interest will grow your deposit faster than simple interest

For example, imagine you deposited $1000 in a savings account with an interest rate of 5.00% p.a,. With simple interest, you’ll pocket $50 of interest every year. However, with compound interest you’ll earn interest on interest, growing your deposit at a faster pace.

Impact of compounding interest

Based on interest being calculated daily and accrued monthly. Does not factor in any additional deposits.

Year 

Balance 

Interest 

Initial deposit

$1000

1

$1051

$51

2

$1105

$54

3

$1161

$56

4

$1221

$60

5

$1283

$62

Source: Ratecity Savings Calculator

So, by the fifth year, your annual interest would have risen from around $51 to around $62 – an increase of around 21%.

You can calculate compound interest yourself with the following formula:

A = P * (1+r) ^n

Where:

  • A = ending balance
  • P = starting balance (or principal)
  • r = interest rate per period
  • n = the number of time periods

Alternatively, you can use RateCity’s savings calculator to find out the total interest you’ll earn on your initial deposit over a specified period. The calculator also helps you calculate the impact that regular savings make on your deposit.

Why use a savings account calculator?

Calculators may help you estimate how much you’ll save over a given period, making it easier to compare savings accounts with different interest rates.

But remember, a calculator is a mathematical tool, and your results will be only as accurate as the information you feed into it. To get more accurate results, it could be helpful to use a budget planner to work out your monthly savings before using that figure to calculate the interest you could earn over time.

How often do savings rates change?

Savings accounts often have variable interest rates, meaning that your bank may choose to raise or lower these rates to suit the market and economic conditions. When calculating how much interest you could earn with a savings account, it’s important to consider that the interest rate when you first open the account may not be the same as the interest rate later on. 

Banks and other financial institutions set the interest rates on their savings accounts based on a wide range of factors. One significant contributor is Australia's national cash rate, which is set by the Reserve Bank of Australia (RBA). This benchmark rate affects interest rates across the country, on loans as well as deposits. 

The RBA Board meets eight times a year (twice a quarter) to discuss whether to raise the cash rate, cut the cash rate, or keep the cash rate on hold. A rising cash rate could make it easier to grow your wealth faster, as your bank may pass this rate hike on to savers as higher savings account interest rates. However, if the RBA cuts the cash rate, banks might also cut savings account interest rates, making it that little bit harder to grow your wealth.

Keep in mind that banks may not always pass on RBA rate changes to their customers, whether savers or borrowers. Banks may also choose to raise or lower their variable interest rates at any time, out of cycle from the RBA.

Other ways to save

Term deposit

If you know that you may be tempted to dip into your savings account from time to time, you could consider locking away your money in a term deposit account for a few months or years to earn interest. 

A term deposit is where you agree to deposit money in an account that cannot be touched without penalty for a fixed length of time, and earn interest on your savings over this term. The more money you deposit, and the longer the savings term you choose, the higher the interest rate you may enjoy. You can't easily access your savings until the end of your term, which could help you make progress towards your savings goal.

Consider checking out our term deposit calculator to work out how much interest you could potentially earn. Keep in mind that many term deposits pay simple interest rather than compound interest, which could affect your savings plans. 

Superannuation

If you are looking for a savings plan for your retirement, consider checking the status of your superannuation fund. Consolidating your super and selecting one fund with fees, charges, and investment options that suit your needs can help make a big difference to your future lifestyle. Making extra superannuation deposits can help to further build this balance.

How can you earn the most interest?

To earn more interest on your savings, you may want to look for a savings account offering a higher interest rate. But the savings accounts with the highest interest rates are also the accounts most likely to have strings attached. 

For example, you may be offered a high introductory interest rate when you first open a savings account, letting you make the most of the interest earnings over the first few months. But once this period expires, you may revert to a lower interest rate instead. 

Other savings accounts offer higher bonus interest rates for borrowers who fulfil certain terms and conditions, such as making regular deposits and no withdrawals. If you can’t comfortably fulfil these requirements as part of your regular household budgeting, you may only benefit from a much lower interest rate. 

Whatever the interest rate, the more money you can deposit into a savings account, and the longer that money stays there, the more interest you may be able to earn over time. You can use the calculator to estimate just how much you could potentially earn in different scenarios.

How do you compare savings accounts?

Many Australians compare savings accounts by looking at the interest rates they offer. While interest rates are important, they’re not the only aspect that’s worth considering. 

You may want to also look at:

  • Terms and conditions for any bonus rates
  • Any other special requirements
  • Extra value-adding features and benefits
  • Convenient access to your savings (e.g. via apps or online banking)

To help make your savings account comparison quicker and easier, RateCity’s Real Time Ratings™ combine the interest and flexibility of each savings account into a single star rating, which is updated regularly for accuracy. The top-rated savings accounts in different categories are ranked on RateCity’s Savings Account Leaderboards, with the top-ranked savings accounts in different categories becoming eligible for a RateCity Gold Award

ratecity-newsletter

Subscribe to our newsletter

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.
Australian Unity
Up
HSBC
AMP Bank
Suncorp Bank
Bendigo Bank
ING
IMB Bank
Greater Bank
Heritage Bank
G&C Mutual Bank
Newcastle Permanent
Macquarie Bank
NAB
Westpac
ubank
Rabobank Australia
MyState Bank
RACQ Bank
BOQ