Compound Interest Calculator Australia
See how compounding builds your money over time. Add regular deposits or plan withdrawals, pick how often interest is added, and find out how long it takes to double, all in Australian dollars.
Estimate only. Interest is worked out daily and added at the interval you choose, at a fixed rate, with no tax or fees. Withdrawals come out of your balance, so interest not yet added can't be withdrawn. Real rates, fees and tax will differ, so check with your provider or a licensed adviser.
Growth schedule
| Year | Deposits | Interest | Total interest | Balance |
|---|
How this compound interest calculator works
Compound interest means you earn interest on your interest. Each time interest is added to your balance, the next round is worked out on a slightly bigger number. Early on the effect is small. After a decade or two it starts doing most of the heavy lifting, and that's what this calculator is built to show.
Enter a starting amount, the interest rate and how long you'll leave it. You can then add regular deposits, or switch to withdrawals if you're planning to draw the money down. The rate can be entered per year, per quarter, per month, per week or per day, which helps when a product quotes something other than an annual figure. Interest is worked out daily and added at the interval you pick, from daily through to yearly. Along with the final balance you get your effective annual rate and the time it takes your money to double.
The compound interest formula
Here Rate is the yearly rate as a decimal, and n is how many times a year interest is added. Regular deposits or withdrawals make the sums longer, so the calculator steps through your timeline day by day instead of relying on a single formula. The two agree when there are no extra cashflows.
Compound vs simple, side by side. Take $5,000 at 6% p.a. with simple interest, where you only ever earn on the original $5,000. Then compare it with interest added monthly.
| Time | Simple interest | Compound (monthly) | Extra from compounding |
|---|---|---|---|
| 5 years | $6,500 | about $6,744 | about $244 |
| 10 years | $8,000 | about $9,097 | about $1,097 |
| 20 years | $11,000 | about $16,551 | about $5,551 |
| 30 years | $14,000 | about $30,113 | about $16,113 |
After five years the two are close. After thirty, compounding has more than doubled the simple-interest result. Time is what makes the difference.
Nominal rate vs effective annual rate
A rate like "6% p.a. compounded monthly" is the nominal rate. Because interest is added through the year, you actually earn slightly more than 6% over twelve months. That real yearly figure is the effective annual rate (EAR).
At a 6% nominal rate, interest added yearly gives an EAR of 6.000%. Added monthly it's about 6.168%, and added daily about 6.183%. The effective rate is a good number to compare when two accounts advertise the same headline rate but add interest at different intervals. The calculator shows it in the results every time.
How long does it take to double your money?
The quick rule of thumb is the Rule of 72: divide 72 by the annual rate. At 6% that's 12 years. The calculator works it out exactly, using the effective rate and a logarithm:
For 6% compounded monthly the exact answer is about 11 years and 7 months, a touch faster than the rule of thumb because the effective rate is a little over 6%. The doubling time on the results panel is for a lump sum with no further deposits, so regular deposits will get you to a bigger balance sooner.
Adding regular deposits
For most people, regular deposits drive the result more than the starting amount. Choose "Add deposits", enter the amount and pick weekly, fortnightly, monthly or another schedule. You can also decide whether the deposit lands at the start or end of each period. Start-of-period deposits earn interest a little sooner, so the final balance is slightly higher.
Example. You start with $5,000 and add $300 a month, with interest at 6% p.a. added monthly. After 15 years the balance is about $99,500. You've put in $59,000, so roughly $40,500 of that is interest. Set the term to 30 years and the same habit becomes a much bigger number, which shows how much extra time adds.
Why starting early beats saving more later
Compounding rewards the person who starts first, even if they stop sooner. Imagine two people saving $300 a month at 6% p.a. Emma saves for 20 years and then stops, leaving the money to grow for another 10 years. Liam waits 10 years, then saves the same $300 a month for the next 20 years. Both put in exactly $72,000, and both finish at the 30-year mark.
| Money put in | Balance at year 30 | |
|---|---|---|
| Emma (starts now, stops after 20 years) | $72,000 | about $252,000 |
| Liam (waits 10 years, saves for 20) | $72,000 | about $138,600 |
The extra decade of growth on Emma's money is worth well over $100,000. You can reproduce both cases with the calculator by changing the time period and deposits.
Planning withdrawals
Compounding also works while you spend, which is useful if you're thinking about how long a lump sum could last. Choose "Take withdrawals", enter the amount and how often you'd take it, and the calculator shows whether the money lasts the full period. If it runs out earlier, it tells you roughly when.
Example. You have $400,000 earning 5% p.a. with interest added monthly, and you withdraw $2,500 a month. After 20 years you've taken out $600,000 and still have about $57,500 left. Stretch it to 25 years and the money runs out after roughly 22 years. A small change to the amount or the rate can shift that by years, so it's worth testing a few versions.
This is a simplified picture with a steady rate. Real investments rise and fall, and superannuation has its own rules and tax treatment, so treat it as a rough guide rather than a retirement plan.
Tax, fees and inflation
The calculator shows the growth before tax, fees and inflation, so the real result will be lower. In Australia, interest from savings and term deposits is generally taxed at your marginal rate. If you want to include tax and see your balance in today's dollars, try our interest calculator, which has tax and inflation options built in. For loans, where compounding works against you, use our mortgage calculator or car loan calculator.
Frequently asked questions
Can I include regular deposits or withdrawals?
Yes. Pick "Add deposits" or "Take withdrawals", then set the amount, how often it happens and whether it's at the start or end of each period.
What's the difference between the nominal rate and the effective annual rate?
The nominal rate is the stated yearly rate. The effective annual rate (EAR) adds the effect of interest being added through the year, so it's a little higher whenever interest is added more than once a year.
What if my rate is quoted monthly or weekly?
Use the drop-down next to the rate to choose per month, per week, per quarter or per day. The calculator converts it into a yearly rate for you.
How is "time to double" worked out?
It uses the effective annual rate and a logarithm to find how long a lump sum takes to double. It doesn't include deposits or withdrawals.
Does compounding frequency make a big difference?
A modest one. Moving from yearly to monthly adds a noticeable amount over long periods, while moving from monthly to daily adds very little. A higher interest rate or a longer time usually matters far more.
Is compound interest taxed in Australia?
Interest earned on savings and term deposits is generally assessable income, taxed at your marginal rate. This calculator doesn't deduct tax, so check with the ATO or a tax professional for your situation.
What happens if my withdrawals are bigger than the interest?
Your balance falls over time. The calculator shows the balance in every period and tells you roughly when the money runs out, if it does.
How accurate are the results?
They're estimates based on a fixed rate and the figures you enter. Real rates change, fees and tax apply, and providers calculate interest in slightly different ways, so confirm details with yours.
This calculator provides general information only and isn't financial, tax or investment advice. It doesn't consider your personal circumstances, and the results are estimates, not predictions or guarantees. Speak with a licensed financial adviser or registered tax agent before making a decision, and check current rates and conditions with your bank or provider.
More tools: simple interest calculator, savings calculator and investment calculator.