Carleton, Inc.
Consumer Lending Software

The Deception of Dates

There are days when I absolutely hate the month of February.  And not just during that month with its sub-zero temps, dark days and endless snow, but when the fact that it has only 28 days wreaks havoc on system lending calculations.

We work to reconcile payment calculations from literally scores of other systems during our project definition process with clients and users. The key is to determine how a particular routine deals with February.  That is as challenging a diagnostic exercise as it gets.

Too many design characteristics draw from the outmoded "360 day year" methodology of 30 years ago.  February 1st to March 3rd may indeed be "30 days" but it most certainly is not a calendar month and Regulation Z, for instance, certainly isn't going to recognize that time period as 1/12 of a year.

It's not merely February but the fact that months have different lengths in days.  A forgotten fine point is that while Appendix J to Reg Z says that "All months shall be considered equal", actual calendar days have to be counted for fractional month periods.  That doesn't jibe with many "360 day year" conceptions that we see put in use.

Like everything else, the devil is in the details.  Consider January 31st to February 28th; it's a month when counting forward for interest accrual purposes but can be a fraction of a month with the Federal Calendar in computing the APR.  That first glance at the dates can be deceptive.

Posted on Jul 28, 2011