# Payment tolerance

By default, an account with an unpaid balance accrues interest according to the rules laid out in [Calculating interest accruals](https://developers.pismo.io/pismo-docs/docs/calculating-interest-accruals). The **payment tolerance** feature enables you to set up additional rules to specify that an account should not accrue interest if the outstanding balance is less than a certain amount.

To configure payment tolerance, use [Pismo Control Center](https://developers.pismo.io/pismo-docs/docs/get-started-with-control-center) to set the following program parameters.

<Table align={["left","left"]}>
  <thead>
    <tr>
      <th>
        Parameter name
      </th>

      <th>
        Definition
      </th>
    </tr>
  </thead>

  <tbody>
    <tr>
      <td>
        **Payment tolerance percentage**
      </td>

      <td>
        A percentage of the total amount due (TAD) that is used by the **Payment tolerance method** to determine if the account should accrue interest. Must be greater than 0 and less than or equal to 100.
      </td>
    </tr>

    <tr>
      <td>
        **Payment tolerance amount**
      </td>

      <td>
        A fixed amount that is used by the **Payment tolerance method** to determine if the account should accrue interest. For example, $70.
      </td>
    </tr>

    <tr>
      <td>
        **Payment tolerance method**
      </td>

      <td>
        The method to apply:

        * **0**—Do not use.
        * **1**—Maximum value. Between the **Payment tolerance amount** and (**Payment tolerance percentage** x TAD), use whichever value is higher. If the difference between the payment and the total amount due is less than or equal to this value, no interest is accrued.
        * **2**—Minimum value. Between the **Payment tolerance amount** and (**Payment tolerance percentage** x TAD), use whichever value is lower. If the difference between the payment and the total amount due is less than or equal to this value, no interest is accrued.
      </td>
    </tr>
  </tbody>
</Table>

# Examples

## Example 1

Suppose you set up the program parameters as follows.

| Parameter name                   | Value       |
| :------------------------------- | :---------- |
| **Payment tolerance percentage** | 10%         |
| **Payment tolerance amount**     | $70         |
| **Payment tolerance method**     | 1 (Maximum) |

Suppose also that TAD = $250.

Since **Payment tolerance method** is set to 1, the Pismo platform uses the higher of the following values:

* **Payment tolerance amount**: $70
* **Payment tolerance percentage** x TAD: 10% x 250 = 0.1 x 250 = $25

$70 is greater than $25, so the platform uses $70 as the actual tolerance value. So, after the due date, **if TAD - payment\<= $70, no interest is accrued.**

## Example 2

Suppose the program parameters are set to the same values as in Example 1, except that `Payment tolerance method` is set to 2:

| Parameter name                   | Value       |
| :------------------------------- | :---------- |
| **Payment tolerance percentage** | 10%         |
| **Payment tolerance amount**     | $70         |
| **Payment tolerance method**     | 2 (Minimum) |

Since **Payment tolerance method** is set to 2, the Pismo platform uses the lower of the following values:

* **Payment tolerance amount**: $70
* **Payment tolerance percentage** x TAD: 10% x 250 = 0.1 x 250 = $25

$25 is less than $70, so the platform uses $25 as the actual tolerance value. So, after the due date, **If TAD - payment\<= $25, no interest is accrued.**