# Deposit and savings interest calculator documentation

Inputs, formulas, assumptions and API/MCP examples for the deposit and savings interest calculator. Reproduce a calculation and cite its sources.

Canonical calculator: https://klarfort.com/tools/deposit-calculator/
Content updated: 2026-09-07
Assumptions reviewed: 2026-09-07

## Overview
Estimate interest and the ending balance for a fixed-rate deposit using your chosen compounding frequency. Include an entered tax rate and a penalty if you plan to withdraw before maturity.

Ladder mode splits the starting principal equally across deposits with staggered maturities. You choose the spacing and rate change between rungs, rather than relying on assumed bank offers.

## How to use
1. Enter the deposit principal, nominal annual interest rate, compounding frequency and first maturity in months.
2. Select a single deposit or a ladder. For a ladder, enter its rung count, maturity spacing and rate step.
3. Enter tax on positive interest and any early-withdrawal month and penalty. A withdrawal month of zero means each deposit matures.
4. Calculate and review gross interest, tax, penalties, net interest and each rung's ending balance.

## Understanding the result
The ending balance adds interest and subtracts modeled penalties and tax. Net interest can be negative when an early penalty reduces the original principal.

In a ladder, the result adds the proceeds from all rungs at their respective withdrawal or maturity dates. Proceeds from an earlier maturity remain cash and earn no additional modeled return.

## Questions
### How is APR different from the annual percentage yield?
The nominal annual rate is divided across compounding periods. Annual percentage yield, or APY, includes the effect of compounding for a year. The displayed APY uses the first deposit's rate before tax and penalties.

### How does an early-withdrawal penalty work here?
For a deposit withdrawn before maturity, the penalty equals the entered number of months of simple interest on its principal. It is capped at the available balance and can reduce principal.

### Are ladder deposits reinvested when they mature?
No. The model holds matured proceeds as cash. Each rung receives an equal share of the original principal and uses the maturity and rate determined by your spacing and rate-step inputs.

## Default worked example
Ending deposit balance: 10,407.42 USD. Ending balances include the entered tax rate and any early-withdrawal penalty. Matured ladder proceeds stay in cash. Assumptions as of 2026-09-07.

## Formula
Gross interest = P ((1 + APR/f)^(f months/12) - 1).

- Fractional compounding periods use the same exponential convention; rates are fixed for each deposit.
- Ladder principal is split equally; rung maturities and rate steps are entered assumptions. Matured proceeds earn no further interest.
- Early penalties equal entered months of simple nominal interest and may reduce principal, capped at the account balance.
- Tax applies only to positive interest after the penalty, at the entered rate; no jurisdictional deductibility rules are assumed.

## Inputs
- currency: Currency; default "USD"
- principal: Deposit principal; default 10000
- annualRate: Nominal annual interest rate (%); default 4
- compoundsPerYear: 1 annual, 2 semiannual, 4 quarterly, 12 monthly, 365 daily.; default 12
- months: First deposit maturity months; default 12
- taxPercent: Tax rate on net positive interest (%); default 0
- withdrawAfterMonths: Withdrawal month (0 means each maturity); default 0
- penaltyInterestMonths: Early penalty in months of simple interest; default 0
- mode: Deposit structure; default "single"
- ladderRungs: Ladder rungs; default 3
- ladderSpacingMonths: Months between ladder maturities; default 12
- ladderRateStep: Annual rate increase per rung (percentage points); default 0

## Interfaces
Input schema: https://klarfort.com/tools/deposit-calculator/schema.json
Worked request and response: https://klarfort.com/tools/deposit-calculator/examples.json
Public table: https://klarfort.com/tools/deposit-calculator/table.json
JSON API: POST https://klarfort.com/tools/api/v1/deposit-calculator
MCP endpoint: POST https://klarfort.com/tools/mcp
MCP tool name: deposit-calculator

## JSON request body
```json
{
  "currency": "USD",
  "principal": 10000,
  "annualRate": 4,
  "compoundsPerYear": 12,
  "months": 12,
  "taxPercent": 0,
  "withdrawAfterMonths": 0,
  "penaltyInterestMonths": 0,
  "mode": "single",
  "ladderRungs": 3,
  "ladderSpacingMonths": 12,
  "ladderRateStep": 0
}
```

## Usage and credit
Free for personal, commercial and any other lawful use with credit to KlarFort at https://klarfort.com/. Third-party data terms still apply.

Computed with KlarFort Calculators, https://klarfort.com/

Place a visible credit near the reused material or in the credits for your work or integration. One clear credit per work or integration is sufficient; no separate credit per API request is required. The credit_url field contains the homepage. The citation_url field is an optional calculator reference. Full permission: https://klarfort.com/tools/docs/license/

## Sources
KlarFort calculator methodology: https://klarfort.com/tools/methodology/ (1)