Suppose you have $200,000 to deposit for a 3-year term with monthly interest payouts at an annual interest rate of 2.5%. You could withdraw about $416.67 in interest each month. This calculator saves you from manual calculations—just enter a few numbers to see the results.

Typical Use Cases

Retirement Planning: Retirees with savings who want a fixed monthly interest to supplement living expenses without touching the principal. Monthly interest payouts work like a pension.
Rental Income Alternative: You have $500,000 and want regular income similar to rent, but without the hassle of managing real estate. Monthly interest payouts are more stable than many other investments.
Education Fund: Parents saving an education fund who want to withdraw monthly interest as an allowance during college, keeping the principal intact for after graduation.

How to Use This Tool

Open our Monthly Interest Payout Calculator. You will see three input fields: Principal ($), Term (Years), and Annual Interest Rate (%).
Enter your deposit amount in the "Principal" box, e.g., 200000.
Enter the deposit duration in the "Term" box, e.g., 3.
Enter the bank's annual interest rate in the "Annual Interest Rate" box, e.g., 2.5 (for 2.5%).
Click the "Calculate" button. The right side will immediately display: Monthly Interest Payout, Total Interest, and Total Principal and Interest at Maturity (principal remains unchanged).
If you want to try a different scenario, simply modify any input value and click calculate again.

Full Calculation Example

Main Example: Mr. Smith deposits $200,000 for a term of 3 years at an annual interest rate of 2.5%, with interest paid out monthly.

Monthly Interest = Principal × Annual Rate ÷ 12 = 200000 × 2.5% ÷ 12 = 200000 × 0.025 ÷ 12 ≈ $416.67
Total Interest = Monthly Interest × Term (months) = 416.67 × 36 ≈ $15,000 (actually 15000.12, rounded)
Total at Maturity = Principal + Total Interest = 200000 + 15000 = $215,000

Comparison Example (Different Term): Same principal of $200,000 and 2.5% annual rate, but the term is changed to 1 year.

Monthly interest remains unchanged: $416.67
Total Interest = 416.67 × 12 = $5,000
Total at Maturity = $205,000
Conclusion: A longer term yields the same monthly payout but higher total interest; the principal remains untouched, making it ideal for long-term planning.

How to Interpret the Results

Monthly Interest Amount	Meaning
Under $100	Small principal or low rate. Limited extra income, suitable for small savings or teaching kids about interest.
$100–$500	Can cover some living expenses (like phone bills or transit). Good as a supplemental allowance.
$500–$2,000	Can serve as fixed monthly living expenses. Suitable for retirement or as a rental income alternative.
Over $2,000	High principal and rate. Substantial monthly interest, but be mindful of taxes and inflation impacts.

Note: Total interest for a fixed-principal payout only depends on the principal, rate, and term. Monthly withdrawals do not affect future interest (because the principal remains unchanged).

Common Pitfalls & Mistakes

Confusing annual and monthly rates: After entering a 2.5% annual rate, the program automatically divides it by 12. If you manually convert it to a monthly rate before entering, the result will be 12 times larger. Always enter the annual rate directly.
Forgetting term conversion: A 3-year term equals 36 months. The calculator handles this automatically, but it's easy to forget to multiply by 12 when calculating manually.
Ignoring early withdrawal penalties: If you withdraw your deposit early, banks typically recalculate your earnings at a much lower standard savings rate, and previously paid interest may be clawed back. This calculator does not account for early withdrawals.
Thinking in compound interest: This product uses simple interest. Monthly interest does not earn additional interest. Do not confuse it with standard compounding CDs.
Ignoring inflation and taxes: Your actual take-home interest may lose purchasing power due to taxes and inflation. The calculator only displays nominal amounts.

Important Notes

This calculator is only for bank monthly interest payout savings products (like interest-disbursing CDs). It does not apply to insurance products, mutual funds, or other investments.
Results are based on idealized assumptions: a full term, simple interest paid monthly, no holiday delays, and no leap year adjustments.
Actual bank rates may change based on policy. Please refer to the posted rate at the time of your deposit. The monthly interest provided by the calculator is for reference only and does not constitute investment advice.
If you choose quarterly or annual interest payouts, you will need to adjust the calculation manually. This tool defaults to monthly payouts.

Frequently Asked Questions (FAQ)

Which is better: monthly interest payouts or a standard lump-sum CD?: Standard CDs usually offer slightly higher rates (e.g., 0.1%–0.3% higher) and compound, but interest is paid in a lump sum at maturity. If you need regular cash flow, choose monthly payouts. If you don't need the money during the term, a standard CD yields more total interest.
Can this calculator figure out early withdrawals?: No. Early withdrawals are recalculated at a standard savings rate, and already disbursed interest may be deducted from your principal. We currently only calculate normal maturity scenarios.
When is the monthly interest deposited?: The deposit date is usually the anniversary date of your account opening each month (or the next business day). Check your bank's specific rules. The calculator shows theoretical interest; actual deposit dates may be affected by weekends and holidays.
With a $500,000 principal and a 3% annual rate, what is the monthly interest?: Enter a principal of 500000, any term (e.g., 1 year), and an annual rate of 3%. The monthly interest = 500000 × 3% ÷ 12 = $1,250. You can try calculating it yourself to verify!
Why is the total interest slightly different from the term multiplied by the monthly interest?: This is likely due to rounding. The calculator rounds to two decimal places, so summing rounded monthly amounts can cause a tiny variance, but it doesn't affect the overall picture.
Can I use this calculator to reverse-calculate the principal?: Reverse calculation is not currently supported. If you want to reach a specific monthly interest goal, you'll need to use trial and error, or wait for our upcoming "Reverse Calculate Principal" feature.