1. What is Daily Accrued Interest?

Daily accrued interest refers to the interest amount that accumulates each day on a principal balance based on an annual interest rate. Monthly interest is the sum of these daily accruals over a month.

2. How Does the Calculator Work?

The calculator uses the following formulas:

Where:

• \( Principal \) — Initial amount of money
• \( Annual\ Rate \) — Annual interest rate in percentage
• \( Number\ of\ Days \) — Days in the month (typically 28-31)

3. Importance of Daily Interest Calculation

Details: Calculating interest daily provides more accurate results than simple monthly calculations, especially for accounts where the balance may change frequently.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate in percentage (e.g., 5 for 5%), and number of days in the month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate interest daily instead of monthly?
A: Daily calculation is more precise and accounts for actual days in the month, leading to fairer interest calculations.

Q2: Does this calculator account for compounding?
A: No, this calculates simple daily accrued interest. For compounding interest, a different formula would be needed.

Q3: What's the difference between 360-day and 365-day basis?
A: Some institutions use 360 days for simplicity. This calculator uses 365 days for more accurate results.

Q4: Can I use this for loan interest calculations?
A: Yes, this works for both savings interest and loan interest calculations.

Q5: How does leap year affect the calculation?
A: For leap years, you might use 366 days instead of 365 for slightly more precise calculations.