Your bank pays the interest you earn either every year or at the end of the specified term.
While some term deposits come with compound interest, most come with simple interest. Interest on some term deposits is paid at the end of the term. Simple interest is usually calculated on your balance daily, then paid to you every four weeks, six months or year. For example, if you save $1000 and earn interest at a rate of 2.5% over 10 years you would have 1,250.00. This means that you earn a percentage on top of what you put in. Simple interest is the interest on the amount you put in savings, at a set rate.
