What is Interest Calculation?
Interest is the cost of borrowing money or the return for depositing money. When you open a savings account at a bank, the bank uses your funds and pays interest as compensation. Higher rates, longer periods, and compound methods yield more interest.
Interest Formulas
Simple Interest = Principal × Annual Rate × Period (years)
Compound Maturity = Principal × (1 + Annual Rate ÷ 12) ^ Months
Savings Simple Interest = Monthly Deposit × Months × (Months+1) ÷ 2 × (Annual Rate ÷ 12)
※ Interest income tax of 15.4% (14% income tax + 1.4% local tax) is withheld from interest.
How to Use the Interest Calculator
STEP 1. Select Calculation Type
Choose between Deposit (lump sum placed at once) and Savings (monthly installment deposits).
STEP 2. Select Interest Type
Choose between Simple Interest (interest on principal only) and Compound Interest (interest on principal + accumulated interest, monthly compounding).
STEP 3. Enter Amount
For deposits, enter the lump sum principal. For savings, enter the monthly installment amount.
STEP 4. Enter Period and Rate
Enter the savings period (in months) and annual interest rate (%). Check the product details for the exact rate.
STEP 5. View Results
Click 'Calculate Interest' to see total principal, pre-tax interest, interest income tax (15.4%), and final after-tax payout at a glance.
Interest Calculator Use Cases
Compare Returns Before Opening an Account
When comparing deposit/savings products from different banks, interest rates alone don't tell the full story. Use the calculator to compare maturity amounts after tax and choose the most advantageous product.
See the Real Difference: Simple vs Compound
Curious about how much simple and compound interest actually differ? Calculate both under the same conditions. For long-term savings (3+ years), the power of compounding becomes clearly visible — useful data for your investment strategy.
Plan Savings for a Target Amount
If you have a specific financial goal — wedding fund, housing deposit, or tuition — adjust the monthly amount and period to see if you can reach your target. Helps you create a realistic savings plan.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal, so interest stays the same each period. Compound interest is calculated on principal plus accumulated interest, growing exponentially over time.
What is the interest income tax rate?
In Korea, the standard interest income tax is 15.4% (14% income tax + 1.4% local tax). Tax-free or tax-advantaged products may have different rates.
Which is better: savings account or time deposit?
If you have a lump sum, time deposits earn more interest. For monthly savings, installment savings help build saving habits. Choose based on your situation.
Do monthly compound interest products actually exist?
Most bank deposits use simple interest. Monthly compounding is mainly offered by CMA accounts and some special financial products. Always check product details before signing up.
What are tax-free savings products?
Tax-free comprehensive savings accounts allow eligible individuals (aged 65+, persons with disabilities, etc.) to save without the 15.4% interest income tax. Up to 50 million KRW per person can be deposited, and all interest is received in full — more favorable than standard taxed products.
What happens to interest if I withdraw early?
If you break your deposit/savings before maturity, a reduced early withdrawal rate applies instead of the agreed rate. It typically drops to less than half the original rate, and shorter holding periods result in even lower rates. To avoid early withdrawal, keep an emergency fund separate.
Disclaimer
Results from this calculator are for reference only and may differ from actual bank product calculations. Please consult your bank for exact maturity amounts. Tax rate is based on standard taxation (15.4%); tax-free or tax-advantaged products have different rates.