The formula
- r
- Annual nominal rate
- B
- Days in the rate basis
- DPR
- Daily periodic rate
- %
- Multiply decimal rate by 100
Worked example: 6.5% APR on a 365-day basis
Convert 6.5% to 0.065 and divide by 365:
As a percentage, the daily periodic rate is 0.01780822%. On a $10,000 balance, one day of simple interest is about $1.78.
Daily periodic rate from APR
When APR is being used as a nominal annual rate, dividing by 365 is the common conversion for a 365-day daily periodic rate. Some contracts use 360 instead, so the denominator matters.
Daily periodic rate versus effective daily rate
An effective daily rate that compounds to a stated effective annual rate is calculated with (1 + EAR)1/365 − 1. That is not the same as APR ÷ 365. Use the convention that matches the rate you were given.
Balance method also matters
A daily periodic rate alone does not determine a credit-card finance charge. Average daily balance, daily balance, grace periods, new purchases, payments, and compounding rules can change the result.
Check the math with a calculator
Enter your own numbers in the matching Power of Interest calculator. The calculator performs the arithmetic while this page explains the formula and assumptions behind it.