Compounding Frequency Comparison Calculator
Compare daily, weekly and monthly compounding on the same rate and see how much extra each schedule earns over time.
How it works
A = P · (1 + r ÷ n)^(n · t) · compared for n = 365, 52, 12, 1
More frequent compounding always earns a little more, but the gain shrinks fast because each extra compounding step splits the same nominal rate into smaller, more frequent pieces. Going from annual to monthly is a meaningful jump; going from monthly to daily barely moves the needle. The theoretical ceiling is continuous compounding, P·e^(rt), which daily compounding already sits within a hair of.
Worked example
On $10,000 at 6% for 10 years, annual compounding gives $17,908, monthly gives $18,194, and daily gives $18,221 — daily beats annual by just $313 over a decade.
Sources: Compound interest — Wikipedia
Frequently asked questions
Does daily compounding make a big difference?
Rarely. On a 6% rate, moving from annual to daily compounding adds well under 2% to the final balance. The nominal rate and the number of years matter far more than the compounding schedule.
What is the limit if compounding gets faster and faster?
Continuous compounding, A = P·e^(rt). Daily compounding is already within a fraction of a percent of that ceiling, so nothing faster gives a practically different answer.
Why do banks advertise APY instead of the nominal rate?
APY (annual percentage yield) folds the compounding schedule into a single figure, so two accounts with different compounding can be compared on one honest number.
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Educational estimate using simplified assumptions — real returns, taxes and fees vary. Not financial advice.