1. What is Daily Interest?

Daily interest is the amount of interest earned or paid each day on an account balance. It's calculated by taking the annual interest rate and dividing it by 365 days to get the daily rate.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• Balance — Current account balance in dollars
• Interest 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, then applies it to the current balance.

3. Importance of Daily Interest Calculation

Details: Calculating daily interest helps understand how much you're earning on savings or paying on loans each day. It's particularly important for accounts with compounding interest.

4. Using the Calculator

Tips: Enter your current account balance and annual interest rate. The calculator will show how much interest accrues each day.

5. Frequently Asked Questions (FAQ)

Q1: Should I use 365 or 360 days?
A: Most calculations use 365 days for greater accuracy, though some financial institutions use 360 days.

Q2: Does this account for compounding?
A: This shows simple daily interest. For compound interest, the calculation would be different.

Q3: How does this differ from APR?
A: APR includes fees and other costs, while this calculates pure interest based on the stated rate.

Q4: What about leap years?
A: For maximum precision in leap years, you could divide by 366 instead of 365.

Q5: Can I use this for credit card interest?
A: Yes, but credit cards typically use daily compounding, which would require a more complex calculation.