1. What is Daily Simple Interest?

Daily simple interest is the interest calculated each day on the principal amount based on the annual interest rate. It represents the amount of interest earned or paid for a single day.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Principal \) — The initial amount of money (in currency)
• \( Annual\ Rate \) — The yearly interest rate expressed as a decimal
• \( 365 \) — Number of days in a year

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

3. Importance of Daily Interest Calculation

Details: Calculating daily interest is essential for understanding how interest accrues over time, especially for savings accounts, loans, and investments where interest compounds daily or is calculated on a daily basis.

4. Using the Calculator

Tips: Enter the principal amount in your local currency, and the annual interest rate as a decimal (e.g., 0.05 for 5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between daily simple interest and compound interest?
A: Daily simple interest calculates interest only on the principal each day, while compound interest calculates interest on both principal and accumulated interest.

Q2: Why divide by 365 instead of 360?
A: 365 represents the actual number of days in a year. Some financial institutions use 360 days for simplicity, but 365 is more accurate.

Q3: How do I convert percentage to decimal?
A: Divide the percentage by 100. For example, 5% becomes 0.05, 3.25% becomes 0.0325.

Q4: Can this calculator be used for loans and savings?
A: Yes, this calculator works for both loans (interest paid) and savings/investments (interest earned).

Q5: What if I want to calculate for a different period?
A: Multiply the daily interest by the number of days to get interest for any period (weekly, monthly, etc.).