Daily Compound Interest Calculator
See exactly how HYSAs, CDs, and money market accounts grow with daily compounding. Defaults are pre-set — change any input to model your scenario.
Why daily compounding is the standard for cash accounts
Banks compound daily on most savings products because it's both fairer to customers and operationally simple at scale. Each day, the bank computes balance × (APR / 365) and adds it to the running balance. At month-end, the accumulated daily interest is credited to your account as a single deposit.
Daily vs monthly vs annual — actual numbers
$10,000 at a flat 5% APR over 10 years:
- Annual compounding: $16,289
- Monthly compounding: $16,470
- Daily compounding: $16,486
- Continuous compounding: $16,487
The difference between annual and daily is about 1.2% over a decade. The difference between daily and continuous is essentially zero. Once you compound daily or faster, you've captured 99.99% of the available compounding benefit.
What this calculator is good for
- HYSA projections — model 4-5% APY over 1-5 years
- CD ladder planning — compare 12, 24, 36, 60-month terms
- Money market funds — most credit interest daily
- Short-term goal saving — emergency fund, down payment, wedding
What it's NOT for
Long-term investing in stocks. Equity returns aren't smooth or daily-compounded — they fluctuate wildly. For projections beyond 5 years, use our compound investment calculator with monthly compounding and a long-term equity rate (~7-10%).
The biggest compounding mistake
Obsessing over compounding frequency while ignoring the APY itself. A 4.5% HYSA compounded daily earns less than a 5.0% HYSA compounded monthly. Always compare APY to APY — that number already accounts for the compounding frequency.
FAQ
What is daily compound interest?
Daily compound interest means the interest earned each day is added to your balance, so the next day you earn interest on a slightly larger amount. Most US high-yield savings accounts (HYSA) and many CDs use daily compounding.
How much more do you earn with daily vs monthly compounding?
On a $10,000 balance at 5% APY, daily compounding produces about $0.55 more per year than monthly compounding. Over 20 years, the gap grows to about $25 — a real but small advantage. The bigger lever is the rate (APY), not the compounding frequency.
What's the difference between APY and APR?
APR is the simple yearly rate before compounding. APY is the effective annual rate after compounding is applied. A 5.00% APR with daily compounding equals about 5.13% APY.