When you save or invest money, one of the most important things to understand is compound interest . Compound interest is when you earn interest not just on your original money (the principal) but also on the interest you've already earned. This means your money grows faster over time. But not all compound interest is the same. The frequency of compounding—how often interest is calculated and added to your account—can make a big difference. The two most common compounding frequencies are daily and monthly . So, which is better: daily or monthly compounding? In this article, we'll compare both methods, see how they work, and find out which one helps your money grow faster. What Is Compound Interest? Before comparing daily and monthly compounding, let's first understand how compound interest works. Simple Interest vs. Compound Interest Simple Interest : You earn interest only ...