A funding rate is quoted for a funding interval, so two percentages are not directly comparable if one applies every eight hours and another every hour. Normalize each rate to a common time basis by multiplying its percentage by the number of intervals per day, or use the funding-rates page's annualization formula: rate percent × (24 ÷ interval hours) × 365. This is a simple extrapolation that assumes the current rate repeats; it is not a forecast of what you will pay.
Convert each quote to a common basis
The funding-rates tool annualizes a rate as:
annualized percent = rate percent × (24 ÷ interval hours) × 365
The same formula without the final multiplication by 365 gives a simple daily estimate:
daily percent = rate percent × (24 ÷ interval hours)
Use the interval attached to that specific contract and rate. Do not assume every pair on one exchange uses the same schedule, and do not confuse an annualized estimate with a guaranteed yield or cost. The displayed rate may change before the next settlement, and the venue can adjust its interval under its rules.
Worked example: 0.01% at 8 hours vs 0.003% hourly
These are illustrative input values chosen to show the conversion, not live exchange rates. For a rate of 0.01% every eight hours, there are three intervals in a day:
0.01% × (24 ÷ 8) = 0.03% per day
The simple annualized figure is:
0.01% × (24 ÷ 8) × 365 = 10.95% per year
For a hypothetical rate of 0.003% every hour:
0.003% × (24 ÷ 1) = 0.072% per day
0.003% × (24 ÷ 1) × 365 = 26.28% per year
Although 0.003% looks smaller than 0.01% when viewed as a single rate, the hourly interval multiplies that per-event rate by more funding events in this linear estimate; it does not model compounding. This comparison still does not say which contract is cheaper for your trade. Rates can change, the position may not be open at every settlement, and each exchange may define the displayed rate and interval differently.
You can use the funding rates page to compare the published snapshots. Check each market's interval before comparing. Then enter a contract's rate, interval, notional, side, and planned hours into the funding fee calculator to estimate an amount for a hypothetical hold. For combined price PnL, fees, and a funding assumption, use the futures PnL calculator.
Read the interval and clock carefully
An interval is not always a timer that starts when your order fills. Exchanges generally apply funding to positions held at their scheduled funding time. For Binance, the official funding guide states a default eight-hour schedule at 00:00, 08:00, and 16:00 UTC, while also saying intervals can be adjusted for a contract. It also describes a small deviation in transaction time. Bybit says pairs can have different intervals and that settlement frequency may switch to hourly when rate limits are reached. These details are venue-specific and can change; both pages were fetched on 2026-11-05. See Binance's funding-rate guide and Bybit's funding fee calculation guide.
That means comparing interval-normalized snapshots helps with scale, but does not establish whether you will pay a particular number of events. If a position opens shortly before a scheduled event, it may encounter a settlement quickly. If it opens just after a scheduled event, its first payment might be many hours later. Consult the exchange's contract page and funding countdown, and reconcile completed trades against the funding records.
Also check whether the quoted percentage is per interval or annualized already. Some dashboards display a rate with an interval label; others may show projected daily or annual figures. Applying the conversion formula to an already-normalized percentage will multiply it twice and produce a misleading result. Keep the original quote, its unit, the interval, and the timestamp together when copying data into a spreadsheet.
What the annualized comparison leaves out
The tool's annualization is arithmetic, not a compounding return model. It multiplies one rate by the assumed count of intervals in a year. It does not assume you reinvest receipts, model changing notional, or predict future funding. If rates alternate between positive and negative, the realized net funding may be much lower than a snapshot annualized number suggests.
Funding is paid from one side of a perpetual contract to the other according to the exchange's mechanism. Binance and Bybit both describe positive funding as long positions paying shorts and negative funding as shorts paying longs. That sign convention is common in their documentation, but verify the interface and contract you are using. A rate that is favorable to your side can still be outweighed by trading fees, spread, or adverse price movement.
Common mistakes
- Comparing raw percentages without checking whether they are hourly, four-hour, or eight-hour rates.
- Treating a simple annualized figure as a promised annual return or a stable forecast.
- Applying the interval conversion to a rate that is already expressed per day or per year.
- Assuming a holding period crosses exactly
hours ÷ intervalsettlements; actual event timing follows the venue's clock and contract schedule. - Comparing rates across different symbols without checking whether the notional, contract type, and settlement currency match.
FAQ
How do I convert an eight-hour funding rate to a daily rate? Multiply the percentage per interval by three. For example, an illustrative 0.01% each eight hours gives 0.03% per day under a constant-rate assumption.
Why can a smaller hourly rate be more expensive? Because there are more hourly events. Normalize rates to the same period, then consider the actual rate changes and event schedule.
Does annualized funding tell me what I will pay over a year? No. It projects the current rate across a year using a fixed interval. Rates, position size, and your open-position times can change.
Are funding intervals always fixed? No. Check the contract-specific schedule. Binance documents a default eight-hour schedule that can be adjusted; Bybit documents differing intervals and possible frequency changes under specified conditions.
This guide is for educational purposes only and is not financial advice.