Deposit Capitalization Calculator

Compounding means adding earned interest to the principal so that subsequent interest is calculated on the enlarged amount. This is the compound interest effect — the more frequent the compounding, the higher the final return.

Daily compounding (365 times a year) is the most favourable because interest is added every day. In practice the difference between daily and monthly is small, but between monthly and annual it becomes significant over longer periods and larger amounts.

The capital gains tax (Belka tax) is 19% of gross interest from bank deposits. The bank deducts it automatically when paying out interest. Example: 500 PLN gross interest → 95 PLN tax → 405 PLN net return.

EAR accounts for compounding frequency and shows the real annual return. Formula: EAR = (1 + r/n)ⁿ – 1. At 6% nominal with monthly compounding, EAR ≈ 6.17%. EAR above nominal means compounding boosts the return.

Compare EAR — it captures the compounding differences. At the same nominal rate a daily-compounded deposit has a higher EAR than an annually-compounded one. The calculator shows EAR for every option.

Standard bank deposits cannot be exempted from Belka tax. The only legal route is saving in an IKE (Individual Retirement Account) — withdrawals after age 60 are tax-free. Government bonds held in IKE/IKZE may also be exempt.

Bank deposits: guaranteed by BFG up to EUR 100,000, fixed rate, can be broken early (losing interest). Government bonds: state-guaranteed, may be CPI-linked (COI series), often higher rates than deposits. Both are subject to Belka tax.

A progressive deposit has an interest rate that rises each month or quarter. It pays to hold it to maturity because the higher rates apply at the end. The calculator uses a fixed rate — results for progressive deposits will be approximate.

Real deposit return = net rate (after Belka tax) minus inflation. At 5.5% gross and 5% inflation, net return is about 4.46% and real return is only about −0.54%, meaning the deposit barely preserves purchasing power. CPI-linked bonds may offer better inflation protection.

Choose a shorter deposit when: you expect rates to rise (renew monthly to get better terms), you need liquidity or want to stagger maturities. Choose longer when rates are expected to fall and you want to lock in high rates.