How much better is daily than monthly compounding?

Very little. At eight percent the difference over a year is a few hundredths of a percentage point. The rate matters enormously and the frequency barely does.

Finance & Loansinterest

Daily Compound Interest Calculator

Daily compounding over any number of days, with the gain over annual compounding shown. The difference is smaller than most people expect and it is the reason continuous compounding is a limit rather than a leap.

Also called: daily interest calculator, compound daily.

Value at the end

₹1,08,328

₹1,08,328 after 365 days, ₹8,328 of it interest. Daily compounding at 8% gives an effective annual yield of 8.33%.

Interest earned

₹8,328

Effective annual yield

8.33%

Interest on the first day

₹22

Interest on the last day

₹24

Extra over annual compounding

₹328

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Divide the annual rate by 365 and apply it every day. Compounding more often always earns more, but with sharply diminishing returns: at eight percent, moving from annual to daily compounding adds about a third of a percentage point of yield, and moving from daily to continuous adds almost nothing. The extra over annual compounding is shown so that ceiling is visible rather than assumed.

value = principal * (1 + annual rate / 365) ^ days

P: Principal (currency)
r: Annual rate (decimal)
d: Days (days)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a year of daily compounding at eight percent

Principal: ₹1,00,000
Annual rate: 8%
Days: 365
Added each day: ₹0

Value at the end₹1,08,328

(1 + 0.08/365)^365 - 1, computed independently

Open this example

a zero rate leaves the principal

Principal: ₹1,00,000
Annual rate: 0%
Days: 365
Added each day: ₹0

Value at the end₹1,00,000

boundary

Open this example

a single day earns one day of interest

Principal: ₹1,00,000
Annual rate: 8%
Days: 1
Added each day: ₹0

Value at the end₹1,00,022

degenerate case: 100000 * 0.08 / 365

Open this example

Method and limits

What it assumes

A 365-day year, and additions credited at the end of each day.

What it deliberately does not model

Actual products use varied day-count conventions, some of which use 360.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

How much better is daily than monthly compounding?: Very little. At eight percent the difference over a year is a few hundredths of a percentage point. The rate matters enormously and the frequency barely does.