1. What is Daily Interest Per Diem?

Daily interest per diem refers to the amount of interest accrued each day on a principal amount based on an annual interest rate. It's commonly used in finance to calculate daily interest charges or earnings.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( P \) — Principal amount in USD
• \( r \) — Annual interest rate in decimal form (percentage divided by 100)
• 365 — Number of days in a year

Explanation: The formula divides the annual interest by 365 days to determine the daily accrual amount.

3. Importance of Daily Interest Calculation

Details: Calculating daily interest is crucial for understanding the cost of loans, the earnings on investments, and for precise financial planning where interest accrues daily.

4. Using the Calculator

Tips: Enter the principal amount in USD and the annual interest rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: While some financial institutions use 360 days for simplicity, this calculator uses 365 for more precise daily calculations.

Q2: Does this account for compound interest?
A: No, this calculates simple daily interest. For compound interest, the calculation would be more complex.

Q3: Can I use this for credit card interest?
A: Yes, but credit cards typically use daily compounding, so this would give you an approximate daily rate.

Q4: What if my interest rate changes during the year?
A: This calculator assumes a constant rate. For variable rates, you would need to calculate each period separately.

Q5: How accurate is this for leap years?
A: For leap years, dividing by 366 would be slightly more accurate, but the difference is minimal for most purposes.