Interest added every day, and what that is worth against yearly compounding
Estimates only, not financial advice. What you type stays on your device. Updated on 24 Oct 2026.Daily compounding sounds far better than yearly and usually is not. This page starts with interest added every one of 365 days, so you can see the whole of the difference for yourself: on a lakh at eight per cent for five years it is worth a few thousand rupees, not a different league. Change the frequency to compare.
The page opens on Compound with interest added daily.
Set the Amount, the Rate you were quoted and the Time.
Read the Compound interest earned and the Effective rate a year.
Open Every compounding frequency to compare daily with monthly and yearly compounding.
Two formulas answer almost every question about interest, and this page runs both on the same numbers so the difference is visible instead of imagined.
Compounding frequency is a choice here, from once a year to every single day, because a bank, a chit fund and a college textbook each assume a different one and the answers differ. Daily compounding on that lakh gives about ₹49,176 of interest rather than ₹46,933: better, but a long way from the leap people expect.
One result surprises people and is shown honestly rather than hidden. For less than a year, yearly compounding gives less interest than the simple formula, because nothing has compounded yet and the exponent charges less than a straight line over a part year.
The rest of the article, and all 6 questions about Interest Calculator, are on the Interest Calculator page.
Simple interest is charged only on the original sum; compound interest is charged on the sum plus the interest already added. Over 5 years at 8% on ₹1,00,000 that gap is ₹6,933 — ₹40,000 against ₹46,933. The longer the term, the wider the gap grows.
More frequent compounding means interest joins the balance sooner and starts earning. On ₹1,00,000 at 8% for 5 years, yearly compounding earns ₹46,933, quarterly ₹48,595 and daily ₹49,176. The rate quoted is the same in all three; only how often it is applied differs.
Yes, for a term under one year at yearly compounding. Nothing has compounded yet, and raising to a fractional power charges less than a straight line: 6 months at 8% on ₹1,00,000 gives ₹3,923 compounded against ₹4,000 simple. Past one year compound interest is always ahead.
Neither, for the precise figure. A loan repaid in monthly instalments charges interest on a balance that shrinks every month, which the EMI calculator handles. A bank fixed deposit compounds quarterly with its own payout rules, which the FD calculator handles. Use this page for a lump sum left alone.
Formula only: no rates or limits are read from an official source.
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Same job, other tools: FD Calculator for Senior Citizens – Senior citizen FD interest, monthly or quarterly, with the extra rate added · FD Interest Calculator – Monthly or quarterly interest from a fixed deposit, and the total over the term.
On the related tools: Step-up SIP Calculator – See how raising your SIP every year changes the final corpus.
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