1. What is Daily Accrued Interest?

Daily accrued interest represents the amount of interest earned or owed each day on a principal amount based on an annual interest rate. It's commonly used in savings accounts, loans, and investments where interest compounds daily.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( \text{Principal} \) — The initial amount of money ($)
• \( \text{Rate} \) — Annual interest rate (as a percentage)
• \( 365 \) — Number of days in a year

Explanation: The formula converts the annual rate to a daily rate by dividing by 365 days, then applies it to the principal amount.

3. Importance of Daily Interest Calculation

Details: Calculating daily interest helps understand how interest accumulates over time, aids in comparing financial products, and is essential for accurate financial planning and loan repayment strategies.

4. Using the Calculator

Tips: Enter the principal amount in dollars and the annual interest rate as a percentage (e.g., enter 5 for 5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for compounding?
A: This calculates simple daily interest. For compound interest, the calculation would be more complex as it includes interest on previously earned interest.

Q2: Why divide by 365 instead of 360?
A: Most modern financial institutions use the actual/365 method. Some may use 360 days (banker's year) which would yield slightly higher daily interest.

Q3: How does leap year affect daily interest?
A: For leap years, some institutions use 366 days which would slightly reduce the daily interest amount.

Q4: Can I use this for credit card interest?
A: Credit cards typically use daily periodic rates (APR/365) but may have different compounding methods and grace periods.

Q5: How accurate is this calculation?
A: This provides a basic estimate. Actual financial products may have different calculation methods, fees, or minimums that affect the total.