1. What is Daily Interest Rate?

The daily interest rate is the interest charged or earned each day on a loan or investment, calculated by dividing the annual interest rate by 365 days.

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 use 360 for simplicity)

Explanation: This calculation converts an annual percentage rate to its daily equivalent, which is useful for loans or investments that accrue interest daily.

3. Importance of Daily Rate Calculation

Details: Understanding the daily rate helps borrowers and investors calculate exact interest charges or earnings for any period, especially important for short-term loans or daily compounding investments.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: Most modern financial calculations use 365 days for greater accuracy, though some institutions still use 360 days for simplicity.

Q2: How does this relate to APR and APY?
A: APR (Annual Percentage Rate) is the annual rate, while APY (Annual Percentage Yield) accounts for compounding. The daily rate helps understand how compounding works.

Q3: Is the daily rate the same as the periodic rate?
A: Yes, when the period is one day. For other periods, you'd need to adjust the calculation.

Q4: How do I calculate monthly interest from the daily rate?
A: Multiply the daily rate by the number of days in the month, then apply it to your principal.

Q5: Does this work for credit cards?
A: Yes, credit card interest is typically calculated using a daily rate based on the APR.