Daily Percentage Rate (DPR) Calculator
Calculate how much interest accrues on a daily basis.
How to Calculate Daily Percentage Rate
The Daily Percentage Rate (DPR) is a financial metric used to determine how much interest is charged or earned on a balance every single day. While most credit cards and loans advertise an Annual Percentage Rate (APR), interest is often calculated on a daily basis based on your average daily balance.
The DPR Formula
Daily Percentage Rate = Annual Percentage Rate (APR) / Number of Days in the Year
Step-by-Step Calculation Example
If you have a credit card with an APR of 24% and you want to find the daily rate using a standard 365-day year:
- Identify the APR: 24% (or 0.24 as a decimal).
- Divide by the Year Basis: 24 / 365 = 0.06575%.
- Apply to Balance: If your balance is $1,000, multiply $1,000 by 0.0006575 (the decimal form of 0.06575%).
- Result: You are being charged approximately $0.66 in interest per day.
Why the Day Count Matters
Different financial institutions use different "day count conventions." Most consumer credit cards use 365 days. However, some commercial loans or "Banker's Year" calculations use 360 days. Using a 360-day year results in a slightly higher Daily Percentage Rate, which increases the total interest paid over time.
Impact of Compounding
It is important to note that the DPR is usually applied to your balance daily. If you do not pay the interest as it accrues, that interest is added to your principal balance, and you will begin paying "interest on interest" the following day. This is known as daily compounding.