Term Deposit Calculator

A term deposit is a fixed-term investment with a bank where you lock your money away for an agreed period (usually 1 month to 5 years) at a fixed interest rate. At maturity, the bank pays you the agreed interest. Most NZ term deposits use simple interest — you earn interest only on the original principal. Your deposit is returned in full at the end of the term.

Resident Withholding Tax (RWT) is deducted from your interest before you receive it. Your RWT rate matches your marginal income tax rate: 10.5% (income up to $15,600), 17.5% ($15,601–$53,500), 30% ($53,501–$78,100), 33% ($78,101–$180,000), or 39% (over $180,000). If you haven't given the bank your IRD number, the no-notification rate of 45% applies.

Simple interest means you earn interest only on your original principal. For example, a $10,000 deposit at 5% for 1 year earns exactly $500. Compound interest means you earn interest on both the principal and any accumulated interest — so monthly compounding at 5% would earn slightly more ($511.62). In practice, most NZ term deposits pay simple interest at maturity, but some longer-term deposits offer periodic interest payments that can be reinvested elsewhere.

The AER is a standardised rate that shows what the interest rate would be if interest were compounded annually. It lets you compare term deposits with different compounding frequencies and payment schedules on a like-for-like basis. For simple-interest term deposits, the AER is always slightly less than the advertised rate because there's no compounding benefit.

PIE (Portfolio Investment Entity) term deposits are taxed at your Prescribed Investor Rate (PIR) — capped at 28% — rather than your full marginal RWT rate. PIR isn't a simple current-income lookup: IRD tests your last two completed tax years against taxable-income-excluding-PIE and 'total income' thresholds of $14,000/$48,000/$70,000, and your PIR is the lower rate implied by the two years. Because those thresholds sit below the RWT brackets, most people with taxable income over roughly $53,500 do save tax with PIE (30–39% RWT vs 28% PIR max) — but someone with $48,001–$53,500 of taxable income can already be capped at the 28% PIR while their RWT rate is only 17.5%, making a standard term deposit the better choice in that band. PIE term deposits also often offer slightly lower headline rates, so compare the after-tax return, not just the rate. This calculator models standard (RWT) term deposits.

If you break a term deposit before maturity, most NZ banks will charge a penalty. This typically involves a reduced interest rate (often a percentage of the original rate) applied to the portion of the term completed, plus an administration fee (usually $25–$50). In some cases, you may receive no interest at all. The specific penalty varies by bank and is disclosed in the term deposit terms and conditions. Early withdrawal is at the bank's discretion.