Formula used
How to use this calculator
- Select a penalty type to load typical starting values.
- Enter the amount, days, and your policy’s grace period.
- Set rates and fees, then add caps if required.
- Choose simple or compounding, and confirm the day-count base.
- Press “Estimate penalty” to view totals and charts.
- Download CSV or PDF to share, audit, or file records.
Example data table
| Scenario | Amount | Days | Rate | Fees | Estimated total penalty |
|---|---|---|---|---|---|
| Late payment | $5,000 | 30 | 18% annual, simple | $25 flat | ≈ $99.66 |
| Early withdrawal | $2,500 | 0 | N/A | 10% percent | ≈ $250.00 |
| Overdraft | $800 | 10 | 24% annual, simple | $35 flat | ≈ $40.26 |
Policy variables that drive penalties
Penalty outcomes depend on three policy levers: timing, pricing, and limits. Timing includes charged days, grace days, minimum charged days, and whether weekends count. Pricing includes an annual rate, a percent fee on the base amount, a flat administrative fee, and an optional daily fee. Limits include minimum and maximum caps, applied either to subtotal or total. Taxes and rounding rules can be layered for local reporting.
Daily interest versus daily compounding
With simple daily interest, the penalty interest grows linearly with days: amount × rate × days/base. With daily compounding, the annual rate becomes a daily factor and accrues multiplicatively. For short spans the difference is small, but beyond 60–90 days compounding can materially increase totals, especially on larger balances. If your agreement uses a 360‑day convention, switch the base to match internal policy.
Tiered rates and escalation controls
Many contracts apply stepped rates. A common pattern is a lower rate for the first tier window and a higher rate thereafter. This calculator supports a tier day cutover plus a second annual rate. Escalation adds an extra percent fee once charged days exceed a threshold, which helps model late-stage penalties, chargeback uplifts, or compliance surcharges. Use escalation to reflect “after notice” add-ons or repeat-offense multipliers.
Date mode and business-day estimation
Operational penalties are often measured in calendar days, while service credits and breach penalties may follow business days. Date mode converts start and end dates into an in-scope day count, and an option excludes weekends. Use this when delays cross weekends or holidays and you need a more defensible, time-stamped assumption for audit notes. Align the start date with the contract’s trigger event, such as invoice due date or breach confirmation.
Reporting, review, and sensitivity checks
After you calculate, review the breakdown (interest, fees, tax) and the waterfall to confirm each component. The over-time curve helps stress-test what happens if resolution slips by 5, 10, or 30 additional days. Export CSV for spreadsheets and PDF for case files, then rerun scenarios with different caps to evaluate worst-case exposure. Keep reports with approvals, and document any overrides or negotiated waivers.
FAQs
What does “days charged” mean?
Days charged are the days that actually accrue penalties after subtracting any grace period. If a minimum charged days rule is set, the calculator enforces that minimum once penalties begin.
When should I use date mode instead of days?
Use date mode when you have real start and end dates and want the calculator to derive the day count. It is especially helpful when excluding weekends for business-day style policies.
How do tiered rates work here?
Tiered interest applies your primary annual rate for the first tier window, then switches to the second annual rate for remaining charged days. This models stepped late-fee schedules and escalating contractual rates.
What is the escalation option used for?
Escalation adds an extra percent fee after a selected charged-day threshold. It helps model add-on penalties after notices, extended delinquency uplifts, or policy-based surcharge triggers.
How are caps applied?
Caps can apply to subtotal or to the final total including tax. A minimum cap enforces a floor, while a maximum cap limits exposure. Use caps to mirror contractual limits or regulatory ceilings.
Can I model a partial payment during the period?
Yes, in simple interest mode only. Enter a payment amount and the charged day it occurs. The calculator reduces principal after that day, lowering subsequent interest while leaving fees and taxes unchanged.