1. What is Interest Rate Per Day?

Interest Rate Per Day represents the daily equivalent of an annual interest rate, calculated by dividing the annual rate by 365 days. This conversion is essential for daily compounding interest calculations and short-term financial planning.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{annual} \) — Annual interest rate (expressed as a decimal)
• 365 — Number of days in a year

Explanation: This formula converts an annual interest rate to its daily equivalent by distributing the annual rate evenly across all days of the year.

3. Importance of Daily Interest Rate Calculation

Details: Calculating daily interest rates is crucial for daily compounding investments, short-term loans, credit card interest calculations, and accurate financial modeling where daily rate application is required.

4. Using the Calculator

Tips: Enter the annual interest rate as a decimal value (e.g., 0.05 for 5%). The value must be greater than 0 for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: 365 days represents the actual number of days in a year, making it more accurate for most financial calculations, though some financial institutions use 360 days for simplicity.

Q2: How does this differ from compound daily rate?
A: This calculates the simple daily rate. For compound interest, you would use (1 + annual_rate)^(1/365) - 1 instead of annual_rate/365.

Q3: Can I use this for monthly calculations?
A: While this gives daily rate, you can multiply by 30 for approximate monthly rate, though exact monthly rate would be annual_rate/12.

Q4: What if I have a percentage instead of decimal?
A: Convert percentage to decimal first (divide by 100). For example, 5% becomes 0.05 before calculation.

Q5: Is this accurate for leap years?
A: This uses 365 days for consistency. For precise leap year calculations, you might use 365.25, but 365 is standard for most financial applications.