päiväkorko

Päiväkorko, which translates to "daily interest" in English, is a term used in finance and banking to describe the interest accrued on a financial instrument over a single day. It is a fundamental concept for calculating interest on loans, savings accounts, and other interest-bearing products. The daily interest rate is typically derived from the annual interest rate.

The calculation of päiväkorko is usually straightforward. The annual interest rate is divided by the number of days in a year. While traditionally 365 days were used, in some financial contexts, 360 days might be employed for simplicity in calculations, especially in older systems or specific market conventions. The formula for daily interest is: Annual Interest Rate / Number of Days in Year.

This daily interest is then applied to the principal amount outstanding for that specific day. For loans, this means the interest amount added to the balance each day is based on the current outstanding principal. For savings accounts, it represents the small amount of interest earned on the deposited funds each day.

Over time, these small daily accruals accumulate. For loans, the total interest paid over the life of the loan is the sum of all the daily interest charges. For savings, it contributes to the growth of the deposited capital. Understanding päiväkorko is crucial for borrowers and savers to accurately track interest expenses or earnings and to compare different financial products effectively.