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Calculator Assumptions and Disclaimers

      What is a savings calculator?

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

      To use our interest calculator, all you have to do is enter the following information: 

      • Your initial deposit amount.
      • Your regular savings, or the amount you plan to deposit each month.
      • Total savings term, or the period for which you plan to keep the money in the account.

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

      • How much you could earn in interest each month.
      • How much you could earn in total after your selected time period has passed.
      • Your estimated final balance.

      The great thing about a savings calculator is that you can compare different scenarios and see how your savings could be affected by different deposit sizes and saving periods.

      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. 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 slowly 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 interest at a compounded rate. It means you earn interest on your initial deposit amount and 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 invested by you. Given the same principal and interest rate, compound interest will grow your deposit faster than simple interest. 

      Here’s an example to help you understand this better. Imagine you invested $1,000 in a fund that provided a return of five per cent per annum (compounded monthly). If you take out the profits as soon as possible, you’ll pocket $50 of interest every year. However, if you reinvested the profits, you’ll earn interest on interest, increasing your deposit at a faster pace. 

      Year Interest Investment 
       0N/A $1,000
       1$51.16$1,051.16
       2$53.78$1,104.94
       3$56.53$1,161.47
       4$59.42$1,220.90
      5$62.46$1,283.36

      So, by the fifth year, your annual interest would have risen from $51.16 to $62.46 – an increase of 22 per cent. 

      A simple way to calculate compound interest is to use the following formula:

      A = P * (1+r) ^n

      Where:

      • A = ending amount
      • P = principal
      • R = rate of interest
      • N = number of periods 

      An even simpler way could be to use this 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 of regular savings on your deposit.

      Why use a savings account calculator?

      Calculators may help you discover an accurate figure regarding how much you’ll save over a given period, making it easier to compare savings accounts with different interest rates. However, it’s worth remembering that 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’ll earn over time.

      Savings Options

      Term deposit

      If you have a specific savings goal you're trying to reach and 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 and earn interest on it. 

      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.

      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.

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      This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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      Frequently asked questions

      How does interest work on savings accounts?

      The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

      Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

      How to make money with a savings account?

      Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

      To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

      How much money should I have in my savings account?

      A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

      If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

      What is an ANZ locked savings account?

      An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

      With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

      Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.