Daily Interest Calculator

What is Daily Interest?

Daily interest is the amount of interest earned or charged on a principal amount over a period of one day. It's commonly used in savings accounts, loans, and other financial products where interest is calculated and applied on a daily basis.

The Daily Interest Formula

The formula for calculating daily interest is:

\[A = P(1 + \frac{r}{365})^n\]

Where:

• \(A\) = Final amount
• \(P\) = Principal amount
• \(r\) = Annual interest rate (in decimal form)
• \(n\) = Number of days

Step-by-Step Daily Interest Calculation

1. Identify the principal amount (P), annual interest rate (r), and number of days (n).
2. Convert the annual interest rate to a daily rate by dividing by 365.
3. Convert the daily rate to decimal form (divide by 100).
4. Plug these values into the daily interest formula.
5. Calculate the final amount (A).
6. Subtract the principal from the final amount to get the interest earned.

Example Calculation

Let's calculate the daily interest for a principal of $1,000, an annual interest rate of 5%, over 30 days:

1. \(P = \$1,000\), \(r = 5\% = 0.05\), \(n = 30\) days
2. Daily rate = \(0.05 \div 365 = 0.000136986\) or 0.0136986%
3. \(A = 1000(1 + 0.000136986)^{30} = \$1,004.11\)
4. Interest earned = \$1,004.11 - \$1,000 = \$4.11

Visual Representation

The green portion represents the principal ($1000), and the blue portion represents the daily interest earned ($4.11).