1. What is Daily Interest?

Daily interest is the amount of interest earned or paid each day on a principal amount based on an annual interest rate. It's commonly used in savings accounts, loans, and credit card calculations.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Principal \) — The initial amount of money ($)
• \( APR \) — Annual Percentage Rate (%)
• \( 365 \) — Number of days in a year

Explanation: The formula converts the annual rate to a daily rate by dividing by 365 days, then applies it to the principal amount.

3. Importance of Daily Interest Calculation

Details: Calculating daily interest helps understand how much you earn on investments or pay on debts each day, which is crucial for financial planning and comparing different financial products.

4. Using the Calculator

Tips: Enter the principal amount in dollars and APR as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for compound interest?
A: No, this calculates simple daily interest. For compound interest, the calculation would be more complex.

Q2: Why divide by 365 instead of 360?
A: Most modern financial institutions use 365 days for daily interest calculations, though some may use 360 days.

Q3: How accurate is this for leap years?
A: For leap years, you could divide by 366 instead of 365 for slightly more accuracy.

Q4: Can I use this for credit card interest?
A: Yes, but credit cards typically use average daily balance methods which are more complex.

Q5: How does daily interest affect my savings?
A: Even small daily interest amounts can add up significantly over time due to compounding.