Home
Back
Daily Interest Rate Formula:
| From: | To: |
The daily interest rate represents the interest accrued per day based on an annual interest rate. It's commonly used in finance for daily compounding calculations, loan interest accrual, and investment growth projections.
The calculator uses the daily interest rate formula:
Where:
Explanation: This calculation divides the annual rate by 365 days to determine the daily interest fraction. The result can be expressed as a decimal (for calculations) or percentage (for display).
Details: Daily interest rates are essential for accurate financial planning, understanding compound interest effects, calculating daily loan interest charges, and projecting investment growth on a daily basis.
Tips: Enter the annual interest rate as a percentage (e.g., 5 for 5%). The calculator will provide both decimal and percentage formats of the daily rate for your convenience.
Q1: Why divide by 365 instead of 360?
A: While some financial institutions use 360 days for simplicity, dividing by 365 provides a more accurate daily rate calculation for most applications.
Q2: How is daily rate used in compound interest?
A: Daily rate is multiplied by the principal daily for simple interest, or used in the compound interest formula: A = P(1 + r/n)^(nt) where n=365.
Q3: What's the difference between decimal and percentage formats?
A: Decimal format (e.g., 0.000137) is used for calculations, while percentage format (e.g., 0.0137%) is easier to understand when comparing rates.
Q4: Can this be used for different compounding periods?
A: This calculator provides the daily rate. For monthly or quarterly compounding, different calculations would be needed based on the compounding frequency.
Q5: Is this accurate for leap years?
A: For most financial calculations, 365 days is standard. Some institutions may adjust for leap years, but 365 provides a consistent daily rate.