Calculate the Daily Interest on a Loan, Account, or Credit Balance

Loans, savings accounts, and credit cards all accrue interest over time. If you’re paying back a credit card bill or looking for the best time to take out a loan, calculating daily interest can give you a better idea of your finances. To calculate daily interest, multiply the balance of your account or principal of the loan by the interest rate or APR, then divide by 365. There are different kinds of interest, however, so we made an easy-to-follow guide that goes over how to calculate daily compounding interest, as well as daily interest.

Formula for Calculating Daily Interest

To calculate your daily interest, divide your percent interest rate by 365 (or 366 in leap years). Then, divide that percentage by 100 to find the decimal form of your daily interest rate. Multiply that by your principal balance to find your daily accrued interest dollar amount.

Method 1

Method 1 of 3:

How to Find the Daily Interest Rate

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1
Divide your percent interest rate by 365. Loans, savings accounts, and credit cards often have annual interest rates. If you have a credit card, you may want to divide by your APR (Annual Percentage Rate), instead.^{[1]
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- APR takes fees into account, as well as interest, and is often 0.1 - 0.5% higher than your interest rate.^{[2]
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- An annual interest rate of 0.5% is 0.00137% daily.
2
Multiply the principal by the decimal form of the daily interest rate. Divide your interest rate by 100 to convert it into a decimal.^{[3]
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Research source} For example, 0.00137% becomes 0.0000137.
- If the principle is $10,000, the daily interest is 10,000 * 0.0000137 = $.1370. Rounded up, this account will earn approximately $.14 per day.^{[4]
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Multiply the principal, $10,000, by the annual percentage rate of .5 percent or .005 to calculate interest manually. The answer is $50.00. Multiply the daily interest amount of $.1370 by 365 days; the answer is also $50.00.

Method 2

Method 2 of 3:

Calculating Daily Interest Using a Computer

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1
Gather the information needed to calculate interest. This includes the amount of money you will be investing or saving, the length of the term, and the proposed interest rates. You may have several sets of variables if your intention is to compare alternatives.^{[5]
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- You will need to prepare a calculation for each alternative to complete your comparison.
2
Label your data in the first column of a spreadsheet. Assign labels in column A, rows 1-4, for the Principal, Interest Rate, Periods, and Daily Interest. These labels are for your reference only.^{[6]
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- You can expand the cell by clicking on the right line of the column number, A, B, or C, etc., then using the arrows to drag the edges of the cell.
3
Enter your data in column B, rows 1-3, to coincide with the labels. Convert the percent interest to a decimal by dividing it by 100, then divide it by 365 to get the daily rate. Use the number of days of your investment or loan as your period. Leave cell B4 (Daily Interest) blank for now.^{[7]
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- The interest rate is usually shown as an annual figure; which is why it needs to be divided by 365 to reach the daily interest rate.
- For example, if your principal to invest is $10,000, and your savings account offers .5 percent annual interest, enter "10000" in cell B1 and "=.005/365" in cell B2.
- The number of periods determines how long your investment will remain in the account untouched, except for the added compounding interest.
4
Create a function in cell B4 to calculate the annual interest as a daily amount. Click on cell B4 to select it, then click inside the formula bar. Type =IPMT(B2,1,1,-B1)" in the formula bar. Press the Enter key.^{[8]
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- The daily interest earned on this account, for the first month, is $.1370 per day.

Method 3

Method 3 of 3:

Calculating Daily Compound Interest

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1
Enter your principal, interest rate, and number of years on a spreadsheet. Assign labels in column A, rows 1-5, for the Principal, Interest Rate, Period (days in a year), Number of Years and Compound Interest Balance. Enter the data for each in cells B1-B4. The period is 365, and the number of years is how long you plan to keep money in the account.^{[9]
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- For example, principal = $2,000, interest rate = 8% or .08 (divide percentages by 100 to get their decimal value), compounding periods = 365 and the number of years is 5.
2
Write =B1*(1+B2/B3)^(B4*B3) in cell B5 and click enter. This is the daily compound interest formula.^{[10]
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Technical support and product information from Microsoft.

Go to source} Compounded daily, the total principal and interest earned balance is $2983.52 after 5 years. This shows how beneficial it can be to reinvest your interest.
- The formula breakdown is: Initial investment * (1 + Annual interest rate / Compounding periods per year) ^ (Years * Compounding periods per year). The ^ indicates an exponent.^{[11]
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  - For example, using the same information from Step 3, principal = $2,000, interest rate = 8% or .08, compounding periods = 365 and the number of years is 5. Compound interest =2,000 * (1 + .08/365) ^ (5 * 365) = $2983.52.

Daily Interest Cheat Sheets

Simple Daily Interest Cheat Sheet

Daily Interest Calculator

Expert Q&A

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How do I calculate the compound annual growth rate?

Paridhi Jain
Certified Public Accountant
Paridhi Jain is a Certified Public Accountant and the Co-Founder of Seva Ltd, a CPA firm operating in Maryland and Alabama. She has over 10 years of professional experience in the financial sector and has built a reputation for assisting small business owners navigate the intricacies of regulatory compliance, encompassing areas from company structuring and entity formation to detailed nexus determinations for income and sales tax. She is an active member of the Alabama Society of CPAs and has a certification in pre-professional accounting. She graduated Magna Cum Laude from the University of Maryland, Baltimore County with a major in Information Systems.

Paridhi Jain

Certified Public Accountant

Expert Answer

The compound annual growth rate (CAGR) concept involves envisioning yourself as a bank that has invested $100 in someone else, expecting a return of $110 by the end of the year. On December 31, when you indeed have $110, the subsequent day's earnings are based on the 10% return on the new total, not just the original $100. This compounding occurs annually, signifying that in the first year, you earn $10 (10% of the initial investment), and in the second year, you earn 10% of the updated amount, which is now $110. Consequently, you earn $11 in the second year. This process continues, representing the annual growth of your invested money.

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Tips

You can use the IPMT function to determine daily interest on a mortgage. If you sell your house in the middle of a month, your final payoff balance will change every day. The daily interest amount can tell you what your exact payoff would be.

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You can also use the IPMT function to determine daily interest on late customer payments.

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Warnings

Laws vary by state about the limits of interest rates and how much interest can compound. For business applications, fully research the state laws where you do business before setting and incorporating a policy for charging interest on late payments.

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