Daily Compound Interest Calculator
Calculate compound interest with daily compounding—the highest frequency used by banks. Maximize your understanding of how savings accounts and CDs calculate your earnings.
Understanding Compound Interest
Compound interest is interest calculated on the initial principal plus all accumulated interest from previous periods. It's often called "interest on interest" and causes savings to grow exponentially over time—the key to long-term wealth building.
Compound Interest Formula
A = P(1 + r/n)^(nt)
Where: A = Final amount, P = Principal, r = Annual rate (decimal), n = Compounding frequency per year, t = Time in years.
Example Calculations
| Principal | Rate | Period | Frequency | Amount | Interest |
|---|---|---|---|---|---|
| ₹5,00,000 | 6% | 3 years | Daily | ₹5,98,583 | ₹98,583 |
| ₹25,00,000 | 7.5% | 5 years | Daily | ₹36,30,157 | ₹11,30,157 |
Rule of 72
A quick way to estimate doubling time: divide 72 by the interest rate. At 8%, money doubles in 72/8 = 9 years. At 12%, it doubles in just 6 years. This rule helps in quick mental calculations for investment planning.
Frequently Asked Questions
What is daily compound interest?
Daily compounding calculates interest every day (365 times/year) and adds it to your principal. The formula: A = P(1 + r/365)^(365t). Most high-yield savings accounts use daily compounding.
Does daily compounding make a big difference?
For short-term deposits, the difference is minimal. For large sums over long periods, daily compounding adds up. Example: ₹10 lakh at 10% for 20 years yields ₹7,039 more with daily vs. annual compounding.