Time Deposit Interest Calculator

Formula

The formula to calculate the Interest Earned (I) on a Time Deposit is:

\[ I = P \times r \times t \]

Where:

$I$ is the interest earned ($)
$P$ is the principal amount deposited ($)
$r$ is the annual interest rate (decimal)
$t$ is the time the money is deposited for (years)

What is Time Deposit Interest?

Time Deposit Interest is the return or profit that a depositor earns from placing their money in a time deposit account in a bank or financial institution. The interest rate is usually higher than a regular savings account because the money is locked in for a specific period of time (term) and cannot be withdrawn until the term ends. The rate of interest is often fixed and depends on the term length, with longer terms generally offering higher rates.

Example Calculation

Let's assume the following values:

Principal Amount (P) = $10,000
Annual Interest Rate (r) = 0.05 (5%)
Time (t) = 3 years

Using the formula to calculate the Interest Earned (I) on a Time Deposit:

\[ I = P \times r \times t = 10000 \times 0.05 \times 3 = 1500 \text{ dollars} \]

The Interest Earned (I) is $1,500.