1. What is Daily Interest Rate?

The daily interest rate is the interest rate applied on a daily basis, calculated by dividing the annual percentage rate (APR) by 365 days. It's commonly used in credit card interest calculations and daily compounding scenarios.

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: Daily rates are essential for understanding how interest accrues on a daily basis, especially for credit cards, loans with daily compounding, and short-term financial products.

4. Using the Calculator

Tips: Simply enter the APR percentage (without the % sign) and click calculate. The result shows the daily interest 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.

Q2: Is this the same as daily periodic rate?
A: Yes, the daily interest rate is also called the daily periodic rate (DPR) in credit card terms.

Q3: How does this relate to compound interest?
A: When interest compounds daily, this rate is applied each day to the current balance (including previous interest).

Q4: What's a typical daily rate for credit cards?
A: For a 15% APR, the daily rate would be about 0.041% (15 ÷ 365).

Q5: Does this account for leap years?
A: This simple calculation uses 365 days. For precise calculations in leap years, some institutions may use 366 days.