Calculate daily compounding interest. See how daily vs monthly vs annual compounding affects your returns.
| Time Period | 5% Return | 7% Return | 10% Return |
|---|---|---|---|
| 5 years | $12,834 | $14,176 | $16,453 |
| 10 years | $16,470 | $20,097 | $27,070 |
| 20 years | $27,126 | $40,387 | $73,281 |
| 30 years | $44,677 | $81,165 | $198,374 |
With daily compounding, interest is calculated and added to your balance every single day. Over time, this produces slightly higher returns than monthly or annual compounding — the more frequent the compounding, the faster growth occurs.
The formula for daily compounding is: A = P × (1 + r/365)^(365×t). At 5% for 10 years with daily compounding, $10,000 grows to $16,487. With annual compounding the result is $16,289 — a difference of about $198.
While the difference between daily and monthly compounding is modest (fractions of a percent), it adds up over decades and on large balances. High-yield savings accounts and money market accounts typically compound daily.
Yes, but only slightly. Daily compounding on $10,000 at 5% for 10 years yields $16,487 vs $16,470 for monthly compounding — a difference of $17. The APY (annual percentage yield) captures this difference.
APR (Annual Percentage Rate) is the stated rate. APY (Annual Percentage Yield) includes the effect of compounding. A 5% APR compounding daily has an APY of 5.127%. Banks advertise APY for savings and APR for loans.
High-yield savings accounts, money market accounts, and most bank accounts compound daily. Certificates of deposit (CDs) may compound daily or monthly. Investment accounts return variably based on market performance.