Daily Interest Calculator
This calculator helps you determine daily interest amounts and total accrued interest for loans or investments. You can calculate both simple and compound interest scenarios.
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Understanding Daily Interest
What is Daily Interest?
Daily interest is the amount of interest that accrues each day on a principal amount. It's calculated based on the annual interest rate divided by the number of days in a year (typically 365).
Simple Interest Formula
Simple interest is calculated only on the original principal amount:
Daily Interest = (Principal × Annual Rate) ÷ 365
Total Interest = Principal × Annual Rate × (Days ÷ 365)
Total Amount = Principal + Total Interest
Compound Interest Formula
Compound interest is calculated on the principal plus accumulated interest:
Daily Rate = (1 + Annual Rate)^(1/365) - 1
Total Amount = Principal × (1 + Daily Rate)^Days
Total Interest = Total Amount - Principal
For other compounding periods, the formula adjusts accordingly.
Example Calculation (Simple Interest)
EX: $10,000 principal, 5% annual rate, 30 days:
Daily Interest = ($10,000 × 0.05) ÷ 365 ≈ $1.37
Total Interest = $10,000 × 0.05 × (30 ÷ 365) ≈ $41.10
Total Amount = $10,000 + $41.10 = $10,041.10
Real-Life Daily Interest Examples
Click on an example to see the step-by-step calculation:
Example 1: Savings Account (Simple Interest)
Scenario: Calculate daily interest on a savings account with $5,000 at 2% annual interest for 60 days.
1. Daily Interest: ($5,000 × 0.02) ÷ 365 ≈ $0.27
2. Total Interest: $0.27 × 60 ≈ $16.44
3. Total Amount: $5,000 + $16.44 = $5,016.44
Conclusion: Earns about $0.27 per day, $16.44 total over 60 days.
Example 2: Credit Card Debt (Compound Interest)
Scenario: $2,000 credit card balance at 18% APR (compounded daily) for 30 days.
1. Daily Rate: (1 + 0.18)^(1/365) - 1 ≈ 0.000452%
2. Total Amount: $2,000 × (1 + 0.000452)^30 ≈ $2,027.35
3. Total Interest: $2,027.35 - $2,000 = $27.35
Conclusion: Accrues about $27.35 in interest over 30 days.
Example 3: Short-Term Loan (Simple Interest)
Scenario: $1,500 personal loan at 10% annual interest for 14 days.
1. Daily Interest: ($1,500 × 0.10) ÷ 365 ≈ $0.41
2. Total Interest: $0.41 × 14 ≈ $5.75
3. Total Amount: $1,500 + $5.75 = $1,505.75
Conclusion: Pays about $5.75 in interest over 14 days.
Example 4: Investment Growth (Compound Interest)
Scenario: $10,000 investment at 7% annual return (compounded daily) for 90 days.
1. Daily Rate: (1 + 0.07)^(1/365) - 1 ≈ 0.000185%
2. Total Amount: $10,000 × (1 + 0.000185)^90 ≈ $10,171.56
3. Total Interest: $10,171.56 - $10,000 = $171.56
Conclusion: Grows by about $171.56 over 90 days.
Example 5: Mortgage Interest (Daily Calculation)
Scenario: $200,000 mortgage at 3.5% annual interest for 1 day.
1. Daily Interest: ($200,000 × 0.035) ÷ 365 ≈ $19.18
Conclusion: Accrues about $19.18 in interest per day.
Example 6: Car Loan (Simple Interest)
Scenario: $25,000 car loan at 5.5% annual interest for 45 days.
1. Daily Interest: ($25,000 × 0.055) ÷ 365 ≈ $3.77
2. Total Interest: $3.77 × 45 ≈ $169.52
3. Total Amount: $25,000 + $169.52 = $25,169.52
Conclusion: Pays about $169.52 in interest over 45 days.
Example 7: Business Loan (Compound Interest)
Scenario: $50,000 business loan at 8% APR (compounded monthly) for 60 days.
1. Monthly Rate: 8% ÷ 12 ≈ 0.6667%
2. Daily Rate: (1 + 0.08)^(1/365) - 1 ≈ 0.000211%
3. Total Amount: $50,000 × (1 + 0.000211)^60 ≈ $50,637.85
4. Total Interest: $50,637.85 - $50,000 = $637.85
Conclusion: Accrues about $637.85 in interest over 60 days.
Example 8: Certificate of Deposit (Daily Compound)
Scenario: $15,000 CD at 2.25% APR (compounded daily) for 180 days.
1. Daily Rate: (1 + 0.0225)^(1/365) - 1 ≈ 0.0000605%
2. Total Amount: $15,000 × (1 + 0.0000605)^180 ≈ $15,164.42
3. Total Interest: $15,164.42 - $15,000 = $164.42
Conclusion: Earns about $164.42 over 180 days.
Example 9: Payday Loan (High Interest)
Scenario: $500 payday loan at 400% APR (simple interest) for 14 days.
1. Daily Interest: ($500 × 4.00) ÷ 365 ≈ $5.48
2. Total Interest: $5.48 × 14 ≈ $76.71
3. Total Amount: $500 + $76.71 = $576.71
Conclusion: Pays about $76.71 in interest over 14 days.
Example 10: Treasury Bill (Simple Interest)
Scenario: $100,000 T-bill at 1.75% annual interest for 91 days.
1. Daily Interest: ($100,000 × 0.0175) ÷ 365 ≈ $4.79
2. Total Interest: $4.79 × 91 ≈ $436.30
3. Total Amount: $100,000 + $436.30 = $100,436.30
Conclusion: Earns about $436.30 over 91 days.
Frequently Asked Questions
1. What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus accumulated interest.
2. How is daily interest calculated from an annual rate?
For simple interest: Daily Rate = Annual Rate ÷ 365. For compound interest: Daily Rate = (1 + Annual Rate)^(1/365) - 1.
3. Should I use 365 or 360 days for calculations?
Most calculations use 365 days. Some financial institutions use 360 days (which results in slightly higher daily interest). This calculator uses 365 days.
4. How does compounding frequency affect interest?
More frequent compounding (e.g., daily vs. monthly) results in slightly higher total interest due to the "interest on interest" effect.
5. What's the daily interest on $1,000 at 5% APR?
For simple interest: ($1,000 × 0.05) ÷ 365 ≈ $0.137 or about 13.7 cents per day.
6. How can I reduce daily interest charges on debt?
Pay down the principal balance, negotiate a lower interest rate, or make payments more frequently to reduce the average daily balance.
7. Why is my credit card interest higher than expected?
Credit cards typically use daily compounding and may calculate interest based on your average daily balance, leading to higher charges than simple interest.
8. How do leap years affect daily interest?
In a leap year (366 days), daily interest would be slightly less as the annual rate is divided by 366 instead of 365.
9. Can I use this for business loan calculations?
Yes, this calculator works for both personal and business loans, provided you know the principal, rate, and term.
10. How accurate are these calculations?
This provides accurate estimates, but actual financial products may have additional fees or slightly different calculation methods.
