Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What is the difference between compounding interest daily versus say monthly on a CD account?

April 26, 2017account CD compounding difference versus

0

Posted

What is the difference between compounding interest daily versus say monthly on a CD account?

1 Answer

0

Posted

Answer Wayne, Simple interest is calculated on the principal only. Compound interest calculates interest not only on the principal but on the prior period’s interest. In the case of daily compounding, interest is calculated daily on the principal and the period to date interest. A good web site which has a graphic explanation as well as a compound interest calculator is: www.finance.cch.com. Hope I’ve been helpful.