How Do You Calculate Interest On Savings Compounded Daily With Additional Deposits?
A very powerful investing tool, compound interest allows an account balance to grow exponentially rather than linearly, as with simple interest. The difference between the two is that simple interest only applies to the original principal and any deposits added to the account whereas compound interest applies to the interest earned on the account balance in addition to the other values. Just as compound interest can be beneficial for investors, it can be detrimental for an account you must repay, which is why some payday loan operators use this method. Calculate the daily rate from the annual percentage rate (APR) for the account by dividing it by 365. Check your bank’s or savings institution’s rules for how to handle leap years. The simplest method is to divide by 366 for those years. Example: 3.65% APR 0.0365/365 = 0.0001, or 0.01% daily Multiply the balance of the account by the daily rate to determine the earned interest. Example: $10,000 @ 3.65% APR 10000*0.0001 = 1.00 Add the int
