1. What is Daily Interest Rate?

The daily interest rate is the interest rate applied on a daily basis, calculated by dividing the annual interest rate by 365 (number of days in a year). It's commonly used in banking, loans, and investments to calculate interest accruing daily.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Annual Rate — The yearly interest rate in percentage
• 365 — Number of days in a year (some calculations may use 360 for banking)

Explanation: This converts the annual percentage rate (APR) into a daily rate for more precise interest calculations over shorter periods.

3. Importance of Daily Rate Calculation

Details: Daily interest rates are essential for accurate interest calculations on savings accounts, credit cards, and loans where interest compounds daily. They provide a more granular view of interest accrual.

4. Using the Calculator

Tips: Enter the annual interest rate as a percentage (e.g., for 5% enter 5). The calculator will automatically compute the daily rate.

5. Frequently Asked Questions (FAQ)

Q1: Should I use 365 or 360 days?
A: Most calculations use 365 days. Some banks use 360 days for simplicity (resulting in slightly higher daily rates).

Q2: How does this relate to compound interest?
A: Daily rates are used in daily compounding where interest is calculated each day and added to the principal.

Q3: What's the difference between APR and daily rate?
A: APR is the annual rate, while daily rate is the proportional rate applied each day.

Q4: Can I use this for credit card interest?
A: Yes, credit card companies typically use daily rates to calculate interest charges.

Q5: How accurate is this calculation?
A: This provides the basic daily rate. For exact amounts, financial institutions may use more precise methods.