Compound Interest Calculator Daily Calculator

Compound Interest Formula (Daily Compounding):

\[ A = P \times (1 + r/365)^{(365 \times t)} \]

Future Value (A):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Daily Compound Interest?

Daily compound interest calculates interest on both the initial principal and the accumulated interest from previous periods, with compounding occurring 365 times per year. This results in faster growth compared to less frequent compounding periods.

2. How Does the Calculator Work?

The calculator uses the daily compound interest formula:

\[ A = P \times (1 + r/365)^{(365 \times t)} \]

Where:

\( A \) — Future value of investment/loan
\( P \) — Principal investment amount
\( r \) — Annual interest rate (decimal)
\( t \) — Time the money is invested/borrowed for (years)

Explanation: The formula calculates how much an investment will grow when interest is compounded daily, providing the most frequent compounding possible.

3. Importance of Daily Compounding

Details: Daily compounding maximizes investment growth by applying interest to both principal and accumulated interest every day. Even small differences in compounding frequency can significantly impact long-term returns.

4. Using the Calculator

Tips: Enter principal amount in ₹, annual interest rate as a percentage (e.g., 5 for 5%), and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does daily compounding differ from monthly/annual compounding?
A: Daily compounding calculates interest 365 times per year, while monthly compounds 12 times and annual compounds once. Daily compounding yields higher returns due to more frequent interest application.

Q2: What's the difference between APR and APY with daily compounding?
A: APR is the annual rate without compounding, while APY includes compounding effects. With daily compounding, APY will be higher than APR.

Q3: Is daily compounding available for all investments?
A: Not all financial products offer daily compounding. High-yield savings accounts, some CDs, and certain investment accounts typically offer daily compounding.

Q4: How does compounding frequency affect returns?
A: More frequent compounding (daily vs monthly vs annually) results in higher effective returns due to interest being calculated on accumulated interest more often.

Q5: Can this calculator be used for loans as well?
A: Yes, the same formula applies to loans with daily compounding, though most consumer loans use monthly compounding instead.