Finance & Money · 计息频率（Compounding Frequency） · Updated 2026-10-25
What Is Compounding Frequency?
Definition
Frequency sets how often interest joins principal. A nominal 6% annual rate yields 6.0% with annual compounding, 6.09% semiannual, 6.17% monthly, 6.18% daily, and e^0.06−1 = 6.18% continuous — gains taper as frequency rises. That is why products must disclose APY (effective annual yield) rather than nominal rate; the "7-day annualized" figure on money-market funds is the same conversion.
Formula
EAR = (1 + r/m)^m − 1, where m is periods per year
Worked Example
On 1M at 6% nominal: annual compounding gives 1.0600M, monthly 1.0617M, daily 1.0618M — daily beats monthly by only ~100, but monthly beats annual by ~1,700.
Common Misconception
Comparing products on nominal rate alone — 6% monthly (6.17%) beats 6.1% annual. On the borrowing side, "daily interest accrual" sounds friendly but daily compounding costs you more than monthly.
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