A monthly periodic calculation
On a $10,000 balance at 8% annually, a simple monthly periodic interest amount is $10,000 × 0.08 ÷ 12 = $66.67. This treats each monthly period as one-twelfth of a year.
A daily calculation
Using a 365-day basis, 30 days of interest is $10,000 × 0.08 ÷ 365 × 30 = approximately $65.75. If the period is 31 days, the amount is higher. If a 360-day convention is used, the result changes again.
Calendar dates create uneven periods
Months have different numbers of days, so actual-day accrual will not produce exactly the same interest every calendar month. A loan with payments on January 31, February 28, and March 31 can have very different day counts between rows.
Payment posting time can affect daily interest
With daily accrual, reducing principal one day earlier can reduce the balance used for the next day's interest. That makes the posting date relevant. A monthly periodic schedule may treat every payment as occurring at the end of an equal period and therefore miss these small timing effects.
Match the lender method before comparing cents
If a schedule differs from a lender statement, determine whether the loan uses actual/365, actual/360, 30/360, or a monthly periodic method. Also verify whether interest is rounded each day, each payment period, or only for display.
Day-count conventions can create systematic differences
A day-count convention is not just a rounding preference. It defines how a year is divided for interest purposes. Actual/365 uses the actual number of elapsed days over a 365-day denominator. Actual/360 uses actual days over 360. A 30/360 method simplifies months to 30 days and years to 360 days under defined rules.
On a large balance, small daily differences can accumulate. If you are auditing a commercial note or irregular-payment loan, record the convention explicitly in the schedule header or notes. Do not rely on a generic “daily interest” label.
For consumer planning, a monthly periodic calculation is often sufficient when the loan itself is structured that way. For reconciliation, however, match the lender’s stated method. Accuracy comes from using the same assumptions, not from choosing whichever convention produces the most favorable result.
Build the numbers instead of estimating them
Use the free online schedule calculator for a complete amortization table. If you need to edit individual payment dates, amounts, rates, or notes and save the revised loan, use Amortization Pro for Windows.