1. What is Daily Interest Rate?

The daily interest rate is the interest charged or earned each day, calculated by dividing the annual percentage rate (APR) by 365 days. It's commonly used in credit cards, loans, and savings accounts.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

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

Explanation: This calculation converts the annual rate to a daily rate by simple division.

3. Importance of Daily Rate Calculation

Details: Understanding the daily rate helps consumers and investors calculate exact interest charges or earnings for any given period, especially important for compounding interest scenarios.

4. Using the Calculator

Tips: Enter the APR as a percentage (e.g., for 15.5% APR, enter 15.5). The calculator will output the daily rate as a percentage.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: 365 is the standard for most consumer products. Some business loans use 360 days - check your contract.

Q2: How does this relate to compound interest?
A: Daily rates are often compounded, meaning each day's interest is added to the principal for the next day's calculation.

Q3: Is this the same as daily periodic rate?
A: Yes, the daily interest rate is also called the daily periodic rate in credit card terms.

Q4: How would I calculate monthly interest from this?
A: Multiply the daily rate by the number of days in the month (but remember compounding may affect actual interest).

Q5: What's a typical daily rate for credit cards?
A: For a 18% APR card, the daily rate would be about 0.0493% (18 ÷ 365).