Reference
Compounding Frequency Table
A quick reference for how often interest is added (n), common frequency names, and where they show up. Use it with the calculator to compare outcomes.
Published: March 12, 2025 · Updated: December 21, 2025 · By FinToolSuite Editorial
Quick answer
Frequency is how many times per year interest is added. More frequent compounding usually nudges the ending value up slightly. Full explanation: daily vs monthly vs yearly compounding.
Disclaimer
Educational purposes only; not financial advice. Examples are illustrative; real returns vary and investments can go down as well as up. Fees, taxes, inflation, and rules vary by provider and country.
Compounding frequency table
| Frequency name | n (per year) | Typical contexts | Notes |
|---|---|---|---|
| Yearly | 1 | Some bonds; some annual interest products | APY/EAR equals nominal if compounding yearly |
| Semi-annual | 2 | Some loans; some savings offers | APY/EAR slightly above nominal |
| Quarterly | 4 | Some savings accounts; some CDs | APY/EAR modestly above nominal |
| Monthly | 12 | Many savings accounts; some loans | Common for consumer products; APY reflects monthly crediting |
| Weekly | 52 | Some specialty products | APY/EAR a bit higher than monthly |
| Daily | 365 | Many modern savings products; some loans accrue daily | APY/EAR slightly above monthly; credited daily |
Short explanation
n is the count of compounding periods per year. More periods mean interest is added more often.
Higher frequency nudges APY/EAR up because each period’s interest starts earning interest sooner.
Time and contributions usually move results more than frequency differences.
Tiny illustration
Example: £1,000 at 5% nominal for 10 years.
| Frequency | Ending balance (approx.) |
|---|---|
| Yearly (n=1) | ~£1,629 |
| Monthly (n=12) | ~£1,647 |
| Daily (n=365) | ~£1,648 |
Use this table with the calculator
- Choose a compounding frequency (n) from the table.
- Set rate, time, and contributions.
- Compare scenarios with different n values.
FAQ
What does compounding frequency mean?
It’s how often interest is added to the balance each year.
What is n in compound interest?
n is the number of compounding periods per year, like 1, 12, or 365.
Is daily compounding better than monthly?
It’s usually a small lift. Time and rate move results more.
What is the most common compounding frequency?
Monthly is common for many consumer products; daily is common for some modern savings accounts.
Does frequency matter for short timeframes?
For short periods or low rates, the difference is small.
How do I choose frequency in a calculator?
Select yearly, monthly, or daily options to match the schedule you want to test.
Is compounding frequency the same as APR/APY?
No. APR is nominal; APY/EAR includes compounding effects, which depend on frequency.
Why do results change when I switch frequency?
Interest is added more or less often, which slightly changes how much earns interest over time.
Compare frequency in the tool
Use the same inputs and switch n to see how yearly, monthly, and daily compounding differ.
Open the calculator