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Simple: P × r × t. Compound: interest is added to the balance each period; effective annual rate = (1 + r/n)^n − 1. Tax is withheld each time interest is credited.
What this calculator does
This deposit interest calculator estimates what a term deposit or savings account pays over a chosen period. The inputs come pre-filled with neutral sample values. Replace them with the figures from your bank's offer, and the result updates next to the inputs.
You can set:
- Principal: the amount you deposit at the start.
- Annual interest (profit) rate: the rate the bank quotes per year.
- Term: how long the money stays in the deposit.
- Method: simple interest, or compound interest with monthly or quarterly capitalisation.
- Tax on interest: the withholding rate deducted from interest, if any.
- Top-ups: a regular amount added to the balance.
The tool shows total interest before and after tax, the final balance and the effective annual rate (EAR).
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Simple vs compound interest
Simple interest is paid on the original principal only. Interest that has already been paid does not earn more interest. Many fixed deposits that pay profit out monthly or at maturity work this way.
Compound interest adds interest to the balance at each capitalisation date, so later interest is calculated on a larger amount. The more often interest is capitalised, the higher the result at the same quoted rate. To see the gap, switch the method in the tool with all other inputs unchanged.
Capitalisation means the bank credits the interest to the deposit balance rather than paying it out.
Formulas used
Simple interest
Interest = P × r × t
- P = principal
- r = annual rate as a decimal
- t = term in years
Compound interest, period by period
- n = number of capitalisation periods in a year (monthly: the months in a year; quarterly: the quarters in a year)
- In each period: new balance = old balance + old balance × r/n
- If you add top-ups, each top-up joins the balance and earns interest from then on.
Tax on interest
Interest after tax = interest − interest × tax rate
Effective annual rate
EAR = (1 + r/n)^n − 1
In words, EAR is the interest a deposit would earn over a full year of compounding, divided by the principal. It lets you compare a monthly-capitalised offer with a quarterly or simple one on the same basis.
How to use the result
- Take the quoted rate, term and payout method from the bank's product sheet.
- Choose simple if profit is paid out to you. Choose compound if it is added to the deposit.
- Enter the tax rate that applies to you. Your bank can confirm the current rate.
- Compare offers by EAR and by interest after tax, not by the headline rate alone.
The tool only does arithmetic. Real deposits can differ because of day-count rules, early-withdrawal penalties, minimum balances and rate changes during the term. Treat the output as an estimate and check the final figures with your bank.
Islamic deposits and National Savings
Islamic banks pay profit on deposits under profit-sharing arrangements. The expected rate is announced, but the actual profit can differ, so the calculator gives an estimate rather than a fixed outcome. For background, see Payments, tax, Islamic banking.
For government products, read National Savings schemes and Savings and deposits. Check each scheme's own profit and tax rules before you enter numbers.
Deposit rates and the SBP policy rate
Bank deposit rates in Pakistan tend to move with the State Bank of Pakistan policy rate. The latest decision we have recorded: SBP policy rate raised by 50 bps to 12% with effect from 27.10.2026 (MPC). More context is on SBP rates and economy.
Interest after inflation
A positive interest figure does not mean your purchasing power grew. To compare the result with price rises, use the real return calculator or the inflation calculator.
Related tools:
- Compound interest for longer horizons.
- Savings goal calculator to work back from a target amount.
- Rule of 72 for a quick doubling-time estimate.
A bank deposit and leveraged trading are very different. Leveraged CFD and forex trading can lose money fast, including more than you expected. Deposit interest figures say nothing about trading results.
Frequent questions
Is this a fixed deposit calculator or a savings calculator?
It is both. A fixed deposit is a term deposit with a set rate and maturity. A savings account usually has a variable rate. For a savings account, enter the current rate and remember it may change.
Why does compound interest give a higher result than simple?
With compounding, interest is added to the balance and earns interest itself. With simple interest, only the original principal earns.
What is the difference between the quoted rate and EAR?
The quoted rate is the annual rate before compounding. EAR includes the effect of capitalisation during the year, so it is the fairer figure for comparing offers.
Should I enter tax?
Enter it if tax is deducted from your interest or profit. Your bank can confirm the rate that applies to your account. The tool shows interest both before and after tax.
Can I use this as a profit calculator for savings in an Islamic bank?
Yes, as an estimate. Enter the expected profit rate. Actual profit under profit-sharing can be higher or lower.
Are the results guaranteed?
No. The tool applies the formulas to your inputs. The bank's terms, any rate changes and early withdrawal decide what you actually receive.