How to apply the "30/360" Day Count Convention to Daily Compound Interest?

Daily Compound Interest do not normally using the 30/360 convention. But if it happens, the Day Count Factor is not a constant of 1/360 for a single calendar day. Day Count Factor becomes 0/360 for the 30th day in a 31-day month, 3/360 February 28 in a regular, and 2/360 for February 29 in a leap year.

Here are some examples:

Day Count Factor for January 30, 2027:
  T1 = (Y1,M1,D1) = (2027,01,30)
  T2 = (Y2,M2,D2) = (2027,01,31)
  Apply the following adjustments: 
    D1 = Minimum(D1,30);
    If D1 = 30 or 31, set D2 = Minimum(D2,30).
  We have: 
    D1 = D2 = 30

  DiR(2027,01,30,2027,01,31)
    = 360×(2027-2027) + 30×(1-1) + (30-30)
    = 360×0 + 30×0 + 0
    = 0

  Day_Count_Factor(2027,01,30,2027,01,31)
    = DiR(2027,01,30,2027,01,31) / 360
    = 0/360 

Day Count Factor for February 28, 2027:
  T1 = (Y1,M1,D1) = (2027,02,28)
  T2 = (Y2,M2,D2) = (2027,03,01)
  No adjustment needed.

  DiR(2027,02,28,2027,03,01)
    = 360×(2027-2027) + 30×(3-2) + (1-28)
    = 360×0 + 30×1 - 27
    = 3

  Day_Count_Factor(2027,02,28,2027,03,01)
    = DiR(2027,02,28,2027,03,01) / 360
    = 3/360 

Day Count Factor for February 29, 2028:
  T1 = (Y1,M1,D1) = (2028,02,29)
  T2 = (Y2,M2,D2) = (2028,03,01)
  No adjustment needed.

  DiR(2028,02,29,2028,03,01)
    = 360×(2028-2028) + 30×(3-2) + (1-29)
    = 360×0 + 30×1 - 28
    = 2

  Day_Count_Factor(2028,02,29,2028,03,01)
    = DiR(2028,02,29,2028,03,01) / 360
    = 2/360

So you will earn no interest on January 30, 2027, 3-day interest on February 28, 2027, and 2-day interest on February 29, 2028. This is why 30/360 Day Count Convention is not used with the Daily Compound Interest method.

⇒ "30/360" - Monthly Compound Interest

⇐ "30/360" - Leap Years

⇑ Day Count Convention - "30/360"

⇑⇑ Day Count Conventions