1. What is Daily Interest?

Daily interest represents the amount of interest earned or paid on a principal amount for a single day. It's commonly used in savings accounts, loans, and investments where interest compounds daily.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( P \) — Principal amount (initial investment or loan amount)
• \( r \) — Annual interest rate (as a decimal)
• 365 — Number of days in a year

Explanation: The formula divides the annual interest rate by 365 to get the daily rate, then multiplies by the principal amount to calculate daily interest.

3. Importance of Daily Interest Calculation

Details: Understanding daily interest helps in comparing different financial products, planning savings strategies, and calculating loan costs accurately. For daily compounding, this amount gets added to the principal each day.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound daily interest?
A: Simple interest calculates only on the principal, while compound interest includes previously earned interest in the calculation.

Q2: How does daily compounding affect total returns?
A: Daily compounding typically yields higher returns than monthly or annual compounding due to more frequent interest calculations.

Q3: Is 365 days used for all calculations?
A: Most financial institutions use 365 days, but some may use 360 days for simplicity in certain loan calculations.

Q4: Can I use this for loan interest calculations?
A: Yes, this calculator works for both savings interest and loan interest calculations.

Q5: How accurate is daily interest calculation?
A: Very accurate for single-day calculations, but for longer periods, compounding effects should be considered.