1. What is the Daily Interest Formula?

The daily interest formula calculates the interest accrued on a savings account over a specific number of days. It's based on the principal amount, annual interest rate, and the number of days the money is held in the account.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( I \) — Interest amount (currency)
• \( P \) — Principal amount (currency)
• \( r \) — Annual interest rate (decimal)
• \( d \) — Number of days (integer)

Explanation: The formula divides the annual interest rate by 365 to get the daily rate, then multiplies by the principal and number of days to calculate total interest earned.

3. Importance of Daily Interest Calculation

Details: Calculating daily interest helps savers understand how much their money can earn over time, compare different savings options, and plan their financial goals effectively.

4. Using the Calculator

Tips: Enter the principal amount in currency, annual interest rate as a decimal (e.g., 0.05 for 5%), and the number of days. All values must be valid (principal > 0, rate ≥ 0, days ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: 365 days represents a full calendar year, providing the most accurate daily interest calculation for most savings accounts.

Q2: How is the annual interest rate converted to decimal?
A: Divide the percentage rate by 100 (e.g., 5% becomes 0.05 as a decimal).

Q3: Does this formula account for compound interest?
A: No, this formula calculates simple interest. For compound interest, a different formula would be needed.

Q4: Can I use this for any currency?
A: Yes, the formula works with any currency as long as all amounts are in the same currency unit.

Q5: What if my bank uses 366 days for leap years?
A: Some banks may use 366 days for leap year calculations. Check with your specific financial institution for their calculation method.