How Kuda Calculates Interest
Kuda operates as a fully digital microfinance bank licensed by the Central Bank of Nigeria (CBN). Unlike traditional banks where savings interest is often unclear or extremely low, Kuda is more transparent about how interest is earned.
However, Interest on Kuda is primarily tied to its Save feature, not your regular spending account. While your main account is designed for transactions, Kuda’s savings tools are structured to reward consistency and discipline.
Understanding how Kuda’s interest works helps you make better saving decisions, avoid unrealistic expectations, and maximize returns on your funds.
Types of Kuda Accounts That Earn Interest
Before understanding calculation, it’s important to know where interest applies.
- Spend Account (Main Account)
Used for transfers, card payments, withdrawals, and daily expenses
Does not earn interest
Acts as a wallet, not a savings account
- Save Account
Designed specifically for saving
Interest is calculated daily
Interest is paid monthly
Funds must be intentionally moved here to earn returns
This structure encourages intentional saving rather than passive accumulation.
Kuda Interest Rate
Kuda offers a competitive annual interest rate compared to most traditional Nigerian banks. The exact rate may vary slightly over time depending on market conditions and regulatory policies, but it is usually higher than standard commercial bank savings rates. What matters most is how the annual rate is broken down and applied daily, which is where many users get confused.
How Kuda Calculates Interest
Annual Interest Rate Is Converted to a Daily Rate, Kuda does not wait till the end of the year to calculate interest. Instead:
The annual interest rate is divided by 365 days this produces a daily interest rate
This means your savings start working for you immediately, not after months.
Daily Balance Determines Interest Earned
- Interest is calculated based on your closing balance for each day.
- If you add more money today, tomorrow’s interest increases
- If you withdraw money today, tomorrow’s interest reduces
There is no fixed minimum daily balance, but higher balances earn more interest.
Interest Accrues Daily (But Is Not Paid Daily)
Although interest is calculated every day:
- It is not credited daily
- All accrued interest is paid once at the end of the month
This makes tracking easier and prevents cluttered transaction histories.
Monthly Interest Credit
At month-end:
- All daily interest amounts are summed up
- The total interest is credited directly into your Save account
- You earn interest on your principal, not on interest (no compounding within the same month
Does Kuda Compound Interest?
Kuda does not compound interest daily, Instead:
- Interest is calculated daily
- Paid monthly
- New interest begins earning only after it is credit
Factors That Affect How Much Interest You Earn on Kuda
Several factors determine your final interest amount:
- Amount Saved: Higher balances earn more interest—simple and direct.
- Duration of Savings: The longer your money stays untouched in the Save account, the more interest accumulates
- Frequency of Withdrawals: frequent withdrawal reduces Daily balance, Total interest earned for the month.
- Interest Rate Changes: Kuda adjust rates based on Economic conditions, CBN policies, Market realities
- When rates change, daily calculations automatically adjust.
How to Maximize Interest on Kuda
- Move idle funds from Spend to Save
- Avoid unnecessary withdrawals
- Save consistently, not randomly
- Keep funds in Save for the full month
- Monitor rate updates inside the app
Kuda’s interest calculation model is simple, transparent, and saver-friendly, especially within Nigeria’s financial landscape where traditional savings often yield little value. By calculating interest daily and crediting it monthly, Kuda ensures that every day your money stays saved actually counts.
While it may not replace high-risk investments or long-term wealth vehicles, Kuda is an excellent option for short- to medium-term savings, emergency funds, and disciplined money management. For Nigerians who want clarity, ease, and fair returns on their savings, understanding how Kuda calculates interest is the first step to using it wisely.
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