Quick answer: 50,000 in a 12-month deposit at 4.5% compounded monthly matures at 52,296.99, which is an APY of 4.594%.
How it's calculated
The balance at maturity is A = P(1 + r/m)^(m·t), where P is the deposit, r the annual rate, m the compounding periods a year and t the term in years (months ÷ 12).
APY = (1 + r/m)^m − 1 is the yield for a full year including compounding, as defined in the US Truth in Savings rules. Compare deposits by APY, not by the headline rate.
Many Gulf term deposits pay profit only at maturity, which is like annual compounding over one year. Islamic deposits (Murabaha or Wakala) quote an expected profit rate that works the same way. For regular additions, use the interest calculator.
Worked examples
- 50,000 at 4.5%, monthly, 12 months: 50,000 × (1 + 0.045/12)^12 = 52,296.99
- Same paid at maturity only (annual): 50,000 × 1.045 = 52,250.00
Frequently asked questions
What is the difference between rate and APY?
The rate is the yearly figure before compounding; the APY includes compounding over a year. A 4.5% rate compounded monthly is a 4.594% APY.
What happens if I break the deposit early?
Most banks pay a reduced rate or charge a penalty, sometimes losing all profit for the period. Check your deposit's terms.
Is my deposit insured?
In the US, the FDIC insures deposits up to its limit. GCC countries have their own arrangements; ask your bank or central bank.
Does a longer term always pay more?
Usually, but not always. When rates are expected to fall, banks may pay less on longer terms, so compare the offers.
How do I compare two deposits?
Compare the APY, because it includes compounding. A lower rate with more frequent compounding can still come out ahead.
Does this work for Islamic term deposits?
Yes, as an estimate. Enter the expected profit rate. Islamic deposits usually state an expected profit, which may not be guaranteed.