# Earn Interest
## Daily Interest
We have introduced a new interest feature which will enable our partners to earn **interest** not only on their business accounts but also on any client accounts they add under their BaaS channel. This section outlines how it works.
### Formula
{% hint style="info" %}
**dailyInterest =** EoD **Balance × (annualRate / 365)**
{% endhint %}
Interest is calculated **per calendar day** and is **credited at end-of-day (**EoD**)** or at a defined daily cut-off time. All daily interest amounts are rounded according to standard currency rules.
An **example**: Taking a hypothetical annual interest rate of 10%, currency as KES, and calculation date as March 15th, the **EoD balance** will be decisive in determining the principal what's used to calculate the interest earned for that day. \
\
Consider balance movements during the day:
| Time (h) | Event | Balance (KES) |
|---|
| 08:00 | Opening Balance | 100,000 |
| 10:00 | Withdrawal | 60,000 |
| 14:00 | Deposit | 80,000 |
| 18:45 | Withdrawal | 70,000 |
| EoD | Closing Balance | 70,000 |
### **Calculation**
{% stepper %}
{% step %}
### **Step 1: Determine** EoD **Balance**
The EoD balance is the closing balance at the end of the business day after all transactions have been processed.
> EoD Balance = **70,000 KES**
> {% endstep %}
{% step %}
### **Step 2: Calculate Daily Interest**
Daily Interest = EoD Balance × (Annual Interest Rate ÷ 365) = 70,000 × (0.10 ÷ 365) ≈ **19.18**
{% endstep %}
{% step %}
### **Step 3: Credit Interest**
* KES 19.18 is credited to the customer's account at EoD
* This amount becomes part of the next day's opening balance
{% endstep %}
{% endstepper %}
### Edge Cases
1. **Zero Balance Day**
If the EoD balance is zero:
* Daily interest = **0**
* No interest is paid for that day, regardless of any transaction flows that occurred
2. **Account Closure Day**
If the account is closed during the day:
* EoD balance = 0 (account is closed)
* No interest is earned on the day of closure
* Final interest payment is based on the **previous day**'s EoD balance
***
## Weekly Interest
We have also introduced a weekly interest feature that complements the daily interest model. This enables partners to earn interest based on the **minimum balance** maintained over a **calendar week**, with payouts processed weekly.
### Formula
```
weeklyInterest = Minimum Weekly Balance × (annualRate / 52)
```
Interest is determined using the **minimum balance observed at any point during the week**, regardless of higher balances held earlier.
* A **calendar week** runs from **Monday 00:00 to Sunday 23:59**
* Interest is **calculated based on the lowest balance recorded during the week**
* Interest is **credited every Monday at 3:00 AM**, based on the *previous calendar week*
* Interest amounts are rounded according to standard currency rules
An **example**: Taking an annual interest rate of 10%, and currency as KES, and these balance changes during the week:
* Monday: KES 5,000,000
* Saturday: Withdrawal → Balance drops to KES 500
* Sunday: Balance remains KES 500
### Calculation
{% stepper %}
{% step %}
#### **Step 1: Determine Minimum Weekly Balance**
The minimum balance recorded during the week is first identified, which in this case is KES 500. This amount is then used as the basis for the interest calculation:
```
Minimum Weekly Balance = KES 500
```
{% endstep %}
{% step %}
#### **Step 2: Calculate Weekly Interest**
```
Weekly Interest = 500 × (0.10 ÷ 52) ≈ 0.96
```
{% endstep %}
{% step %}
#### **Step 3: Credit Interest**
**KES 0.96** is credited on **Monday at 3:00 AM.** This reflects interest for the **previous calendar week.** The credited amount becomes part of the current week’s balance
{% endstep %}
{% endstepper %}
---
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