1. What is Daily Interest Rate?

The daily interest rate is the interest charged or earned each day based on an annual percentage rate (APR). It's calculated by dividing the APR by 365 (number of days in a year).

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 assumes simple interest and doesn't account for compounding effects.

3. Importance of Daily Rate Calculation

Details: Knowing the daily rate helps in understanding how much interest accrues daily on loans or investments, allowing for better financial planning and comparison of different financial products.

4. Using the Calculator

Tips: Enter the APR as a percentage (e.g., for 5.5% APR, enter 5.5). The calculator will automatically compute the daily rate.

5. Frequently Asked Questions (FAQ)

Q1: Does this account for compounding interest?
A: No, this calculates the simple daily rate. For compound interest, more complex calculations are needed.

Q2: Why divide by 365 instead of 360?
A: 365 is standard for most consumer loans. Some business loans use 360-day years - check your terms.

Q3: Is this the same as daily periodic rate?
A: Essentially yes, though some financial institutions might use slightly different terminology.

Q4: How accurate is this for leap years?
A: For leap years, you could divide by 366 for slightly more precision, but the difference is minimal.

Q5: Can I use this for credit card interest?
A: Yes, credit card APRs are typically converted to daily rates this way, though they compound daily.