An interest plan can be one of two types:

• A fixed interest rate is an interest rate on a loan or investment that remains the same for the entire term or a specified part of the term.
• A floating interest rate (sometimes called a variable or adjustable interest rate) is a rate of interest that can change over the term of a loan or investment. It typically is based on a benchmark interest rate or market index that changes periodically, such as the U.S. Prime Rate or the London Interbank Offered Rate (LIBOR). In addition to the benchmark rate, the floating interest rate on a loan should also include a margin that is kept constant. For example, if the benchmark rate is 3 percent and the margin is 2 percent, the interest rate would be 5 percent. If the benchmark rate rises to 4 percent, the interest rate would adjust to 6 percent.

Add a fixed interest rate plan

To add a fixed rate interest plan:

1. From the main menu, select Setup > Interest plans.
2. On the Interest plans screen, select Create.
3. On the Select an interest plan type screen, select Fixed rate and select Next.
4. On the Fixed rate plan details screen, enter a descriptive name for the plan in the Name field.
5. Select the Currency code menu and then choose the currency to be used.
6. Select one of the following buttons to select the accrual basis (method used to calculate the interest accrual):
   • Actual/360 (or Act/360): Interest rate is divided by 360 and then multiplied by the actual number of days that the capital is borrowed.
   • Actual/365 (or Act/365): Interest rate is divided by 365 and then multiplying it by the actual number of days that the capital is borrowed.
   • Actual/Actual: This method is somewhat more complex as it involves taking into account the actual number of days in the relevant year. If the time period spans two different years, the interest is calculated separately for each year.
   • BD/252: This option is often used in the Brazilian market. It takes into account only the number of business days in a year, which is typically 252. The interest rate is divided by 252 and then multiplied by the actual number of business days that the capital is borrowed.
7. Select one of the following buttons to select the interest type:
   • Simple
   • Compound
8. Select one of the following buttons to select the capitalization frequency:
   • Daily
   • Monthly
   • Quarterly
   • Half yearly
   • Yearly
9. Select one of the following buttons to select the accrual frequency:
   • Daily
   • Monthly
   • Quarterly
   • Half yearly
   • Yearly
10. In the Fixed interest rate field, enter the interest rate and select Next.
11. On the Associate processing code screen, select one of the following options:
    • Do not associate: Do not associate this interest plan with a processing code.
    • Associate: Associate this interest plan with a processing code.
      You can associate this interest plan with a processing code to create your financial setup. This association is optional, define what makes sense for your business plan.
12. Select Next.
13. On the Review screen, verify that the information you provided is correct, then select Finish.

Add a floating interest rate plan

To add a floating rate interest plan:

1. From the main menu, select Setup > Interest plans.
2. On the Interest Plans screen, select Create.
3. On the Select an interest plan type screen, select Floating rate and select Next.
4. On the Floating rate plan details screen, enter a descriptive name for the plan in the Name field.
5. Open the Currency code menu and then choose the currency to be used.
6. Select one of the following buttons to select the accrual basis (method used to calculate the interest accrual):
   • Actual/360 (or Act/360): Interest rate is divided by 360 and then multiplied by the actual number of days that the capital is borrowed.
   • Actual/365 (or Act/365): Interest rate is divided by 365 and then multiplied by the actual number of days that the capital is borrowed.
   • Actual/Actual: This complex method takes into account the actual number of days in the relevant year. If the time period spans two different years, the interest is calculated separately for each year.
   • BD/252: This option is often used in the Brazilian market. It takes into account only the number of business days in a year, which is typically 252. The interest rate is divided by 252 and then multiplied by the actual number of business days that the capital is borrowed.
7. Select one of the following buttons to select the interest type:
   • Simple
   • Compound
8. Select one of the following buttons to select the capitalization frequency:
   • Daily
   • Monthly
   • Quarterly
   • Half yearly
   • Yearly
9. Select one of the following buttons to select the accrual frequency:
   • Daily
   • Monthly
   • Quarterly
   • Half yearly
   • Yearly
10. Select one of the following buttons to select the benchmark index used to measure the interest a value has over time.
    • BOE: (Bank of England, UK)
    • DI: (Interbank Deposit Contract – Brazil)
    • FED: (Federal Reserve System – USA)
    • RBA: (Reserve Bank of Australia)
    • RBI: (Reserve Bank of India)
11. (Optional) In the Margin rate field, enter the additional interest rate added to the benchmark rate to determine the total interest rate (for example, 103 percent of the FED rate).
12. (Optional) In the Margin field, enter the difference between the interest rate charged on loans and the interest rate paid on deposits.
13. Select Next.
14. On the Attach processing code screen, select one of the following options:
    • Do not attach: Do not attach this interest plan to a processing code.
    • Attach: Attach this interest plan to one or more processing codes.
      If you are attaching more than one processing code, choose the Select button for each one.
15. Select Next.
16. On the Review screen, verify that the information you provided is correct and select Finish.