Daily compounding

A Daily compound period calculates interest for each day by multiplying the balance by the Daily Rate. This interest is then added to the balance and compounded each day. The Daily Rate is determined by dividing the Nominal Annual Rate by the Year Length (e.g., 360, 364, or 365).

With Daily, Exact Days, and Continuous compounding, interest amounts don't always decrease each month during a standard loan. This is because, for example, there may be two or three more days interest in an April 15 monthly payment than in a March 15 monthly payment.