Interest Ledger Calculator

How to read your result

The large figure is what is owed on the date named beside it, and it is the sum of exactly two things: the principal still outstanding and the interest that has accrued but not been paid. Underneath it sits the per diemThe interest one further day adds at the current balance — the number that tells you what a delayed settlement costs. — what one further day adds at the current balance. A settlement figure without a per diem goes stale the moment it is quoted, because the amount owed on Tuesday is not the amount owed on Friday.

The line of small text under the total is the method disclosure, and it is also the control that changes it. It names the compounding, the rate, the day-count conventionThe agreed rule for how many days a period contains and how long a year is — the single most common reason two honest people compute two different interest totals., the allocation rule, whether arrears themselves earn interest, and how rounding is handled. Nothing about how the number was produced is hidden behind a tooltip, because the person you are showing it to will ask.

The Reconciled mark is not decoration. Eight arithmetic identities are checked on every recalculation — that the segment days add up to the term, that the interest column adds up to the total, that principal advanced less principal repaid equals the balance, and so on. If any of them failed, the tool would say so instead of showing you a number.

How the calculation works

The engine does not treat a loan as a formula with three inputs. It treats it as a sorted list of dated events and cuts the timeline at each one, producing a set of accrual segments in which the balance and the rate are both constant. Within a segment the arithmetic is a single line:

Events on the same date are applied in a fixed order — advances, then the accrual cut, then repayments, then rate changes — so money advanced and repaid on the same day behaves sensibly and a rate change governs only the time in front of it. Inserting a backdated row does not patch the balance forward; the whole ledger is recomputed from the origin, which is the only way a late-discovered receipt produces the same answer as one entered in order.

Money is never a floating-point number here. Every balance, rate and day-fraction is carried as an exact fraction and rounded exactly once, at display. That is why the segment column adds up to the total to the paisa rather than to within a rounding error, and it is what makes the reconciliation checks meaningful rather than decorative.

Worked example

A lender advances ₹15,00,000 on 29-Nov-2025 at 1.35% per month, simple, for 6 months — maturing 29-May-2026. On 26-Feb-2026 the borrower returns ₹5,00,000 of principal. Under 30/360 (US) the loan splits into two segments:

Principal outstanding at maturity is ₹10,00,000 and the interest is ₹1,00,575, so the settlement is ₹11,00,575. Each further day adds ₹450. Note the divergence the tool reports quietly underneath: that term is 181 actual calendar days but 180 under 30/360 (US). Both are correct inside their own system, and the tool refuses to pick one silently.

Day-count conventions, and why the total changes

A day-count convention is the agreed answer to two questions: how many days are in this period, and how many days are in a year. It sounds like bookkeeping trivia and it is the single most common reason two honest people compute two different totals. Here is the same worked example above, recomputed under each convention:

30/360 (US) makes every month 30 days and every year 360. Dates on the 31st are treated as the 30th, and an end-of-February date is treated as the 30th so that February is not short-changed. It is the default here because a rate quoted per month implies months of equal length. 30E/360 is the Eurobond variant: any 31st becomes a 30th unconditionally, with no February rule, so a February period is genuinely shorter than under the US rule.

The Actual family counts the real calendar. Actual/365 divides by a fixed 365 whatever the year. Actual/360 divides by 360 — the money-market basis, which charges about 1.39% more than Actual/365 over the same period, because 365 ÷ 360 is 1.0139 and the days do not shrink to match. Actual/Actual splits the accrual at each 1 January and divides each part by the true length of its own year, so a leap year is genuinely 366 days long.

US Rule versus Merchant’s Rule

When a payment arrives, something has to decide what it pays off. The United States RuleThe standard treatment for simple-interest notes: a payment clears the interest accrued to that date first, and only what is left reduces principal. — the default here, and the standard treatment for simple-interest notes — applies the payment first to the interest accrued up to that date, and only the remainder reduces principal. If the payment is smaller than the accrued interest, the principal does not move at all and the shortfall carries as arrearsInterest that has fallen due and was not paid — carried as a separate balance rather than added to principal.. On the conventional treatment those arrears do not themselves earn interest, which is precisely what stops a simple-interest note from quietly becoming a compounding one.

The Merchant’s RuleThe single date every amount in a settlement is valued at, so sums paid on different dates can be compared. does no running allocation at all. Interest runs on the full advance to a single focal date, each payment separately earns interest from its own date to that date, and the two sides are netted. Take a small ledger: ₹1,00,000 lent on 01-Jan-2026 at 1% a month for six months, with a single ₹5,000 payment three months in, when ₹3,000 of interest has accrued.

• US Rule. ₹3,000 of the payment clears the accrued interest and only ₹2,000 comes off the principal. Total payable at maturity: ₹1,00,940.
• Merchant’s Rule. Interest runs on the whole ₹1,00,000 for the full term, and the payment earns its own interest credit for the remaining half. Total payable: ₹1,00,850.

The gap is ₹90 — exactly the interest that the ₹3,000sent to interest under the US Rule would have saved had it reduced the principal instead. That is the whole difference between the two rules, in one number. A third option, principal-first, is what a payer means when they hand over money and say it is for the principal; under simple interest with no arrears it produces the same total as the Merchant’s Rule, from the opposite direction.

Why prepaying saves interest

Interest on a reducing balance is rent on money, charged by the day. Return part of the principal and you stop paying rent on that part from that day forward — nothing more mysterious than that. The saving is therefore the amount returned, multiplied by the days it would otherwise have stayed outstanding, multiplied by the daily rate.

In the worked example above the borrower returned ₹5,00,000 with 93 days of the term left, and the daily rent on that slice was ₹225. So: ₹5,00,000 unpaid for 93 days at ₹225/day = ₹20,925.

The tool does not take that on trust. It computes the saving the hard way first — by deleting the repayment and re-running the entire ledger to the same end date, which gives ₹1,21,500 of interest instead of ₹1,00,575, a difference of ₹20,925 — and only then checks it against the one-line formula. A saving figure quoted without its proof is an assertion; quoted with one, it is arithmetic the other party can redo on the back of an envelope. Where a later payment would re-allocate once the first is removed, the two methods legitimately diverge, and the tool says so rather than hiding it.

Which export to use when

A settlement travels through three different channels and they want three different things, so the exports are genuinely different artifacts rather than one file under three names.

What this does not do

It computes; it does not adjudicate. The tool will faithfully produce a total under whatever basis you set, including one that no court in your jurisdiction would enforce. Interest-rate ceilings, the treatment of penal charges, and the statutory power to reopen an unfair bargain all vary by place and by the status of the lender, and none of that is modelled here.

It also assumes the two of you agree on the events. The arithmetic is only as good as the dates and amounts in the ledger, and a disputed receipt is a disputed receipt whatever the segment table says. Where the parties disagree about the basis rather than the facts, the convention comparison is the useful screen: it shows what each competing reading is worth in money, which is usually a faster route to a settlement than arguing about principle.

Under Actual/Actual the tool splits a segment that crosses 1 January and divides each part by its own year length; the exported workbook uses the year of the segment start throughout, so a segment spanning a year end can differ there by a few rupees. Every other convention is exact in the workbook. Adding a brand-new transaction to the workbook, or moving one past another, changes where the segments fall — regenerate it from the tool rather than editing around it.

Glossary

Accrual

Interest earned by the passage of time, whether or not it has been billed or paid.

Reducing balance

Interest charged on what is still outstanding rather than on the original sum, so a repayment lowers every future charge.

Broken period

A stretch shorter than a whole month or quarter, which is what most segments in a real private loan are.

Rest

The point at which unpaid interest is folded into the principal and starts earning interest itself. Monthly rests are the regulated norm for banks; a private loan has none unless the parties agree one.

Arrears

Interest that fell due and was not paid, tracked separately so the principal is left alone.

Focal date

The single date every amount is valued at, so sums paid on different dates can be compared.

Per diem

What one further day adds at the balance as it stands.

Day-count convention

The agreed rule for how long a period and a year are — the setting that most often makes two honest calculations disagree.

Frequently asked questions

Sources and methodology

The allocation default comes from the decision the United States Rule is named after; the two 30/360 variants follow the documented NASD and European methods; the contrast with regulated lending comes from the RBI direction requiring monthly rests on advances; and the caution about enforceability comes from the statute that lets a court reopen a usurious bargain. Links open in a new tab.

• Story v. Livingston, 38 U.S. (13 Pet.) 359 (1839) — the decision the United States Rule comes from, directing that receipts be applied first to interest already accrued and only then to the discharge of principal, which is exactly the default allocation used hereUnited States Reports, Library of Congress · 1839 · verified 2026-09-01
• DAYS360 function — documents the two 30/360 day-count methods this tool implements, including the US (NASD) rule that rolls a month-end date and the European rule that simply treats any 31st as a 30thMicrosoft · 2026 · verified 2026-09-01
• Master Direction — Reserve Bank of India (Interest Rate on Advances) Directions, 2016 — section 4 requires regulated lenders to charge interest on advances at monthly rests, which is the contrast this tool makes visible: an informal loan carries no such default and stays simple unless the parties agree otherwiseReserve Bank of India · updated 1 October 2025 · verified 2026-09-01
• The Usurious Loans Act, 1918 (as modified to 3 December 2018) — gives courts power to reopen a transaction where the interest is excessive and the dealing substantially unfair, which is why this tool computes a figure rather than asserting that a figure is enforceableGovernment of India · 1918 · verified 2026-09-01

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