What is the effective interest rate for a credit card advertised at 28% interest compounded daily?

Question

What is the effective interest rate for a credit card advertised at 28% interest compounded daily?

by which formula?

Answer 1

The formula is: (1+ annual rate/compounding periods per year) to the power of number of compounding periods per year -1; (slash (/) is division symbol)

Therefore the effective rate is: (1+.28/365) to the power of 365 minus 1.

Effective annual rate is .322987792 or 32.2987792 %

Or in comparison with 2 compounding periods per year (once each six months) the effective rate would be:

(1+.28/2)to the power of 2 minus 1 or .2996 or 29.96 %