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Daily Compound Interest Formula

The interest calculated on the primary principal and also on the accumulated interest of previous periods of a deposit or loan is called Compound Interest. In much simpler terms, Compound interest is the “interest on interest”. This interest usually makes a deposit or loan grow at a faster rate when compared with simple interest.

The amount of interest computed on an account such as a savings account or a checking account on a monthly basis or daily basis is known as the compound interest. A Certain amount is added to the principal amount, the money added on this basis is known as the interest amount.

Daily Compound Interest Formula

\[\LARGE Principal\left (1+\frac{Rate}{365}\right)^{365\times Time}-Principal\]

Solved Examples

Question 1: A sum of Rs 4000 is borrowed, and the rate is 6%. What is the daily compound interest for 2 years?
Solution:

Daily Compound Interest = Principal$(1+\frac{Rate}{365})^{365*Time}$ – Principal
Daily Compound Interest = 4000$(1+\frac{6}{100*365})^{2*365}$ – 4000
Daily Compound Interest = 4000 * 1.127 – 4000
Daily Compound Interest = 508
The daily compound interest for 2 years is Rs 508
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