Calculation methods
How to choose a day-count convention
Compare actual/actual, actual/360 and actual/365 interest calculations in Flinq.
Written by Katrin Erb Updated Published A day-count convention converts an annual interest rate into the amount earned for each calendar day.
Supported conventions
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Actual/actual: divides the annual rate by 365 on dates in a normal year and 366 on dates in a leap year.
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Actual/360: divides the annual rate by 360 for every actual calendar day.
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Actual/365: divides the annual rate by 365 for every actual calendar day.
Calculation effect
For a positive balance, the daily gross interest is broadly:
Balance × annual rate ÷ day-count divisor
Flinq calculates each included day using the balance, effective profile period and divisor for that date. Actual/360 therefore produces a larger daily amount than actual/365 at the same balance and rate.
Choose the convention
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Review the bank agreement and identify the required day-count convention.
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Confirm the convention separately for the interest profile and any standing-rate profile.
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When you create the new effective-dated profile period, select the agreed Day Count Convention and save the period.
Verify the setup
Compare a representative balance and date range with the bank's calculation, including leap-year dates where relevant. Confirm the tiering method and rate as well as the day-count convention.
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