Exact Interest
Interest calculation method based on actual days and a 365-day year rather than an ordinary 360-day convention.
Interest calculation terms used to distinguish exact, ordinary, gross, and general interest-computation methods.
Exact, ordinary, and gross interest calculations distinguish how time is counted and whether the interest amount is measured before deductions or adjustments.
Use this branch when an interest amount must be traced from the stated method to the amount shown on a bank statement, loan payoff, note, or accrual schedule.
| Term | What it clarifies |
|---|---|
| Exact Interest | Interest based on actual days and a stated annual denominator. |
| Ordinary Interest | Interest often associated with a 360-day year convention. |
| Gross Interest | Interest measured before deductions such as taxes, withholding, or some fees. |
| Interest Calculation | The broader process of computing interest from rate, balance, time, and method. |
A short-term loan can accrue a different dollar amount under an actual-day method than under an ordinary-interest convention. The difference may be small on one transaction, but material across large balances, many accounts, or longer periods.
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Interest calculation method based on actual days and a 365-day year rather than an ordinary 360-day convention.
Gross interest is interest earned or charged before deducting taxes, fees, withholding, or other reductions.
Interest calculation determines the interest earned or owed using principal, rate, time, compounding, and day-count rules.
Ordinary interest calculates simple interest using a 360-day year rather than the actual number of days in a year.