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Prorated Interest Calculator

Work out interest for any number of days.

Result

$73.97
$1.64
45

How it is calculated

This is simple (non-compounding) interest on a fixed balance for part of a year. The daily interest is daily = principal × rate ÷ 100 ÷ 365 and the result is interest = daily × days. The rate is the annual percentage rate (6 means 6%), and the year is always 365 days; there is no 360-day option and leap years are not treated differently. Days may be a decimal; the interest uses the exact number, while the displayed day count is rounded to a whole number. Principal and days cannot be negative. The amount is shown in US dollars with the daily figure rounded to cents, so multiplying that rounded daily amount by the days can differ by a cent or two.

Worked example

A balance of 10,000 at 6% per year for 45 days. Daily interest = 10,000 × 6 ÷ 100 ÷ 365 = 1.6438, which is shown as $1.64. For 45 days the interest is 1.6438 × 45 = 73.97. So the prorated interest is $73.97. Note that 45 × the rounded $1.64 would give $73.80; the tool multiplies the unrounded daily amount, so the figure shown is the more accurate one.

Try this example →

Common mistakes

  • Entering the rate as a decimal such as 0.06. The field expects a percentage, so type 6; 0.06 means 0.06% and gives a result 100 times too small.
  • Using a lender's 360-day convention and expecting it to match. This tool always divides by 365, so a loan that accrues on 360 days will show a slightly different daily amount.
  • Entering the monthly rate as the annual rate. A rate of 1.5% per month must be entered as 18.
  • Counting days inclusively when the contract does not. The tool takes the number you give it; whether the start and end dates both count depends on the loan terms.
  • Expecting compounding. Interest here is not added back to the balance, so for periods that cross a compounding date the figure will be lower than the lender's.

Sources

About this calculator

Prorated interest calculates the interest owed for a partial period — rather than a full month or year — on a balance earning or accruing a fixed annual rate. The standard method takes the annual rate, divides it into a daily rate (commonly using a 360- or 365-day year convention depending on the financial context), and multiplies that daily rate by the balance and the exact number of days in the partial period.

Lenders use it to calculate interest due when a loan is paid off mid-cycle, banks use it to credit interest on an account that was opened or closed partway through a statement period, and buyers and sellers use it in real estate closings to prorate interest on assumed mortgages or seller-financed deals between the closing date and the next full payment date.

Interest for a part period comes from three numbers, the balance, the annual rate and the number of days, so you can see what a few days or weeks actually cost.

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Comments (1)

  • Editorial team

    The tool divides by 365 days. If your lender uses a 360-day year, multiply the result by 365 ÷ 360, about 1.0139, to approximate their figure. Also ask whether the payoff day counts, since that single day changes the days you enter. Which day-count basis does your lender use?

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