1. What is Daily Periodic Rate?

The daily periodic rate is the interest rate applied to a loan or credit card balance on a daily basis. It's calculated by dividing the annual percentage rate (APR) by 365 (days in a year).

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( APR \) — Annual Percentage Rate in percent
• 365 — Number of days in a year

Explanation: This calculation converts the annual rate into a daily rate by dividing by the number of days in a year.

3. Importance of Daily Rate Calculation

Details: Knowing the daily rate helps understand how interest accrues on credit cards and loans, allowing for better financial planning and comparison of different credit offers.

4. Using the Calculator

Tips: Simply enter the APR percentage (without the % sign) and click calculate. The result will show the daily periodic rate in percentage.

5. Frequently Asked Questions (FAQ)

Q1: Is the daily rate the same as daily compound interest?
A: No, the daily rate is the base rate applied each day. Compound interest depends on whether and how often the interest is added to the principal.

Q2: Why divide by 365 instead of 360?
A: Most financial institutions use 365 days for daily rate calculations, though some may use 360. Check your credit agreement to be sure.

Q3: How is the daily rate used in credit card calculations?
A: Credit card companies multiply your daily balance by the daily rate to calculate interest charges for that day.

Q4: Does a lower APR always mean a better deal?
A: Generally yes, but also consider fees, grace periods, and other terms when comparing credit offers.

Q5: Can I use this for mortgage calculations?
A: While this calculates the daily rate, mortgage interest is typically calculated monthly, so this would just be a starting point.