Day Count Actual360 calculator
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Formula
Interest = Principal × (Annual Rate / 360) × Actual Days
The Actual/360 convention divides the annual interest rate by 360 to obtain the daily rate, then multiplies by the actual number of calendar days in the period. This produces a year fraction of Actual Days / 360, which is used as the accrual factor for interest calculations.
Worked Examples
Example 1: Commercial Loan Interest (6 Months)
Problem: Calculate interest on a $250,000 loan at 6.25% from March 1 to September 1 using Actual/360.
Solution: Actual days: March(31) + Apr(30) + May(31) + Jun(30) + Jul(31) + Aug(31) = 184 days\nYear fraction (Actual/360): 184 / 360 = 0.51111\nInterest = $250,000 × 6.25% × 0.51111 = $7,986.11
Result: Interest (Actual/360) = $7,986.11
Example 2: Bond Accrued Interest Comparison
Problem: Compare accrued interest on a $1,000,000 bond at 4.5% from Jan 15 to Jul 15 using Actual/360 vs Actual/365.
Solution: Actual days: Jan(16) + Feb(29) + Mar(31) + Apr(30) + May(31) + Jun(30) + Jul(15) = 182 days\nActual/360: $1,000,000 × 4.5% × 182/360 = $22,750.00\nActual/365: $1,000,000 × 4.5% × 182/365 = $22,438.36\nDifference: $311.64 more under Actual/360
Result: Actual/360: $22,750 | Actual/365: $22,438.36 | Diff: $311.64
Frequently Asked Questions
What is the Actual/360 day count convention?
The Actual/360 day count convention calculates interest by dividing the actual number of days in a period by 360 days per year. This method is widely used for money market instruments, commercial loans, and LIBOR/SOFR-based floating rate products. Because it divides by 360 instead of the actual 365 or 366 days in a year, it effectively charges slightly more interest than an Actual/365 convention for the same annual rate. For every full calendar year, the borrower pays interest for 365/360 = 1.01389 year fractions, resulting in approximately 1.4% more interest than Actual/365. This makes Actual/360 more favorable to lenders.
What is the difference between Actual/360 and 30/360 day count conventions?
Actual/360 uses the real calendar number of days between two dates divided by 360, while 30/360 assumes every month has exactly 30 days and divides by 360. For example, from January 15 to February 15 is 31 actual days under Actual/360 but exactly 30 days under 30/360. The 30/360 convention (also called Bond Basis) is simpler to calculate and is commonly used for corporate and municipal bonds, while Actual/360 is standard for money markets, LIBOR-based loans, and many floating-rate instruments. The choice of convention can significantly impact interest amounts, especially over longer periods or with large principal amounts.
Why do banks use Actual/360 instead of Actual/365?
Banks prefer Actual/360 for commercial lending because it generates slightly higher interest income. When the annual rate is divided by 360 instead of 365, the daily rate is higher (e.g., 5% / 360 = 0.01389% vs. 5% / 365 = 0.01370% per day). Over a full 365-day year, this results in approximately 1.39% more interest collected. For a $1,000,000 loan at 5%, the difference is about $694 per year. This convention also aligns with the historical banking practice of using a 360-day year for simplified calculations. Regulators and courts have upheld this practice as standard, though borrowers should be aware of its effect on effective interest rates.
How does the Actual/360 convention affect mortgage calculations?
While residential mortgages typically use the Actual/365 or 30/360 convention, some commercial mortgages and adjustable-rate mortgages use Actual/360. This means the borrower pays interest on 365 days but the daily rate is calculated using a 360-day year, resulting in higher effective interest. For a $500,000 commercial mortgage at 6%, the annual interest using Actual/360 is approximately $30,416.67 (365 × $500,000 × 6% / 360) versus $30,000 using Actual/365, a difference of $416.67 per year. Over a 10-year loan term, this can add up to several thousand dollars in additional interest, making it important to verify which convention is specified in loan documents.
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