At People Driven Credit Union, daily simple interest means interest accrues each day on your current outstanding principal balance. The amount of interest charged depends on your balance, your interest rate, and the number of days between payments.
How the calculation works
Principal Balance × (Annual Interest Rate / Year Count) × Number of Days Since Last Payment
The year count may be 360 or 365 depending on your loan documents. Because interest accrues daily, the number of days between payments affects how much interest is due.
Simple example
This example uses a $1,000 loan at 5.00% APR, a 365-day year count, and a fixed monthly payment of about $85.61. This example is for illustration only.
$1,000 × (5.00% / 365) × 31 = $4.25 interest
$85.61 payment – $4.25 interest = $81.36 applied to principal
New principal balance = $918.64
Example of six months of payments
| Payment Date | Days Since Last Payment | Payment Amount | Interest Paid | Principal Paid | Remaining Principal Balance |
| 1/15/25 | $1,000.00 | ||||
| 2/15/25 | 31 | $85.61 | $4.25 | $81.36 | $918.64 |
| 3/15/25 | 28 | $85.61 | $3.52 | $82.09 | $836.55 |
| 4/15/25 | 31 | $85.61 | $3.55 | $82.06 | $754.49 |
| 5/15/25 | 30 | $85.61 | $3.10 | $82.51 | $671.98 |
| 6/15/25 | 31 | $85.61 | $2.85 | $82.76 | $589.22 |
| 7/15/25 | 30 | $85.61 | $2.42 | $83.19 | $506.03 |
What this means for you
- Your payment first covers the interest that accrued since your last payment.
- The rest of your payment goes toward principal.
- When you pay on time, your balance keeps going down and your loan stays on schedule.
- Paying earlier or making extra payments can reduce the amount of interest that accrues over time.
- Paying later can increase the amount of interest due because more days have passed between payments.
For a full explanation, you can also review the PDCU Daily Simple Interest PDF.
If you have questions about how daily simple interest applies to your loan, call 844-700-7328 during business hours.
