1. What is Daily Compounding?

Daily compounding means your interest earnings are calculated and added to your principal balance every day. This creates a snowball effect where you earn interest on both your original deposit and previously earned interest.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

• \( A \) — Final amount
• \( P \) — Principal investment amount
• \( r \) — Annual interest rate (decimal)
• \( t \) — Time in years
• 365 — Number of compounding periods per year

Explanation: The formula calculates how your money grows when interest is compounded daily, which is more frequently than standard monthly or annual compounding.

3. Benefits of Daily Compounding

Details: Daily compounding maximizes your earnings potential. Even small differences in compounding frequency can lead to significant gains over time, especially with high-yield accounts like SoFi's that offer competitive APYs.

4. Using the Calculator

Tips: Enter your initial deposit, the annual interest rate (e.g., 4.60 for SoFi's 4.60% APY), and the number of years you plan to save. The calculator will show your projected balance and total interest earned.

5. Frequently Asked Questions (FAQ)

Q1: How does SoFi's APY compare to traditional banks?
A: SoFi's high-yield savings (currently 4.60% APY) typically offers 10-20x higher returns than traditional savings accounts.

Q2: Is the interest rate guaranteed?
A: APYs can change based on market conditions, but SoFi has historically offered competitive rates.

Q3: Are there any fees?
A: SoFi doesn't charge monthly maintenance fees or require minimum balances for their savings accounts.

Q4: How often is interest paid?
A: Interest is compounded daily and credited to your account monthly.

Q5: Is my money safe in a SoFi account?
A: SoFi accounts are FDIC-insured up to $250,000 per depositor through partner banks.