Term Deposit Break Cost Calculator

Breaking a term deposit before it matures almost always costs you interest, because the bank recalculates your return at a lower rate for the time your money was actually invested. This Term Deposit Break Cost Calculator estimates that cost so you can decide whether early access is worth it. You enter the deposit amount, the agreed interest rate, the reduced rate the bank will apply if you break early, and the number of days that have already passed. The tool works out the interest you would have earned at the agreed rate for those days, the interest you actually receive at the reduced rate, and the difference, which is the penalty you give up. For example, a $20,000 deposit at 5 percent that is broken after 180 days, with the rate cut to 2.5 percent, earns $493.15 at the agreed rate but only $246.58 at the reduced rate, a penalty of $246.58. Savers needing cash early, people comparing a break against a short-term loan, and anyone weighing up reinvesting at a higher rate use this to see the real cost before they ring the bank. Good practice is to check your deposit terms for the exact reduction the bank applies, since some scale it by how early you break, and to ask whether any flat administration fee is charged on top. Compare the penalty against the benefit of having your money now, and consider a partial withdrawal if your bank allows one. Figures are an estimate, so confirm the reduced rate with your bank.

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Deposit amount ($)

Agreed interest rate (%)

Reduced rate on early break (%)

Days elapsed

$246.58

Interest penalty

Interest at agreed rate$493.15

Interest at reduced rate$246.58

Interest = principal x rate x days / 365. Penalty = interest at agreed rate - interest at reduced rate. Estimate only, not financial or tax advice.

How it works

Interest at the agreed rate is the principal multiplied by the agreed rate and the days elapsed, divided by 365. Interest at the reduced rate uses the same days but the lower rate. The penalty is the agreed interest minus the reduced interest.

Worked example

A $20,000 deposit at 5 percent over 180 days earns $20,000 times 0.05 times 180 divided by 365, which is $493.15. At the reduced 2.5 percent it earns $246.58. The penalty you give up is the difference, $246.58.

Related calculators

Effective Annual Rate Calculator: compare real rates.
RWT on Interest Calculator: tax on interest.
PIE PIR Rate Calculator: find your PIR.
Term PIEs vs Term Deposits: background on this topic.

Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

Why do banks reduce the interest rate when you break a term deposit?

The agreed rate rewards you for leaving the money untouched for the full term. If you break early the bank recalculates your interest at a lower rate for the period the funds were actually held. The difference is the cost of early access.

How is the break cost calculated?

You work out interest at the agreed rate for the days elapsed, then interest at the reduced rate for the same days. The penalty is the difference between the two. Some banks also charge a separate administration fee.

Can I avoid the break cost?

Sometimes. A few banks allow a partial withdrawal or a notice period at less cost. Check your specific terms, since the reduction and any fees vary between providers and products.