What is daily compound interest?
Daily compound interest adds interest to your balance once every day, so that the next day’s interest is calculated on a slightly larger amount. This “interest on interest” effect is the same idea behind all compounding — daily compounding simply applies it as often as a calendar allows, which edges out monthly or annual compounding for the same headline rate.
It is the natural model for high-yield savings, money-market accounts, and day-trading return projections, where gains are often credited and re-risked every single day.
How is daily compound interest calculated?
With a fixed daily rate the balance grows as A = P(1 + r)t, where P is the principal, r is the daily rate as a decimal and t is the number of days. When you enter an annual rate instead, it is first converted to a daily rate by dividing by 365, giving A = P(1 + r/365)365 × years.
For example, $1,000.00 at 5% a year compounded daily for one year grows to about $1,051.27 — a touch more than the $1,050.00 you would get without compounding, because each day’s interest joins the balance and earns too.
Example: $10,000 at 5% compounded daily for 5 years
The table below is produced by the same engine that powers the calculator above, with weekends included and full reinvestment. Notice the yearly interest rising even though the rate never changes — that is daily compounding at work.
| Year | Interest | Accrued interest | Balance |
|---|---|---|---|
| 1 | $512.67 | $512.67 | $10,512.67 |
| 2 | $538.96 | $1,051.63 | $11,051.63 |
| 3 | $566.59 | $1,618.22 | $11,618.22 |
| 4 | $595.64 | $2,213.86 | $12,213.86 |
| 5 | $626.17 | $2,840.03 | $12,840.03 |
Reinvestment and weekends
Two controls make this calculator different from a plain compound tool. The daily reinvest rate decides how much of each day’s interest compounds versus how much is taken out as cash, and the include-weekends toggle lets you accrue on business days only. Together they cover everything from a fully-reinvesting savings account to a weekday-only trading account that withdraws part of its gains.
A note on accuracy
Time is measured in calendar days, with months approximated as 30 days and years as 365. Real accounts vary in their day-count conventions, and rates rarely stay constant. Treat these figures as an illustration of the mechanics — not as a forecast or as financial advice.
Frequently asked questions
What is daily compound interest?+
It is compound interest where the interest is added to your balance once every day. Because each day’s interest immediately starts earning interest of its own, daily compounding grows a balance slightly faster than monthly or yearly compounding at the same headline rate.
How is the daily rate worked out from an annual rate?+
The entered rate is divided by the length of its period to get a per-day rate. A yearly rate is divided by 365, a monthly rate by 30, a weekly rate by 7, and a daily rate is used as-is. That per-day rate is then applied once for each day in the term.
What does the daily reinvest rate do?+
It sets how much of each day’s interest is compounded back into the balance. At 100% everything is reinvested; at 80%, four-fifths is reinvested and one-fifth is paid out as cash. At 0% nothing compounds and all interest is withdrawn — useful for modelling income you take out rather than leave to grow.
Why would I exclude weekends?+
Some accounts and trading strategies only earn on business days. Turning off “include all days of week” means interest accrues on weekdays only — about 261 days a year instead of 365 — while the end date still moves by the full calendar span.
Can I add regular deposits or withdrawals?+
Yes. Choose Deposits or Withdrawals and set an amount and frequency (daily or monthly). These cash flows are applied at the end of each period and are kept separate from the interest figures.