A daily periodic interest rate is calculated by dividing the annual percentage rate (APR) by either 360 or 365, depending on the card issuer. The resulting daily periodic interest rate is then used to calculate interest by multiplying the rate by the amount owed at the end of each day. This amount is then added to the previous day’s balance, which means that interest is compounding on a daily basis.

However, the interest rate for a credit card is usually stated as an annual rate (the annual percentage rate or APR).