What is the Definition of Actual 360?

Actual 360

Noun

Definition: An interest rate accrual method in which interest calculation charges interest for all 365 calendar days using a 360-day year. A 30/360 interest calculation assumes that all 12 months of a calendar year have 30 days and uses a 360-day year. Therefore, borrowers pay 5 days more interest than under 30/360. The Actual/360 interest calculation produces an effective interest rate that is 12 basis points higher than that produced by the 30/360 interest calculation.

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