How it works
A = P × (1 + r ÷ m)m × t
- P — deposit
- r — yearly rate ÷ 100
- m — times interest is added per year
- t — term in years
The more often interest is added, the more you earn, because interest itself starts earning interest. The APY (annual percentage yield) shows the rate after that effect, so it is the fair way to compare deposits.
Fixed-term deposits usually charge a penalty — often a few months of interest — if you withdraw early. Only lock away money you will not need before the term ends.