Overnight Rate Calculator

The overnight rate is the interest rate at which major financial institutions borrow and lend money to one another for a single business day (overnight). Because the loan matures the very next morning, banks price it using the shortest possible tenor, making it the foundation for virtually every floating-rate product in the financial system — from adjustable mortgages to corporate revolving credit lines.

Central banks and their associated clearing mechanisms publish official overnight benchmarks each business day. In the United States the two most widely quoted rates are SOFR (Secured Overnight Financing Rate), which is based on actual transactions in the Treasury repurchase-agreement (repo) market, and the Effective Federal Funds Rate (EFFR), which reflects unsecured interbank lending. Globally, the UK uses SONIA (Sterling Overnight Index Average) and the Eurozone uses €STR (Euro Short-Term Rate).

Until 2023, LIBOR dominated as the world's benchmark. Following the LIBOR scandal and subsequent regulatory reform, regulators worldwide transitioned to these newer, transaction-based overnight rates. SOFR, published by the Federal Reserve Bank of New York, is now the dominant USD benchmark for new contracts.

For lenders and treasury desks, overnight rates serve as the risk-free base to which credit spreads are added when pricing loans. For borrowers, a lower overnight rate directly reduces the cost of variable-rate debt. Understanding how interest accrues over one or more days at these rates — and how spreads alter the effective cost — is critical for treasury management, loan pricing, and cash-management decisions.

Several distinct overnight benchmarks exist for different currencies and funding markets. Choosing the correct rate for your calculation is essential because each reflects a different segment of the short-term lending ecosystem.

This calculator applies the Actual/360 day-count convention used by SOFR, EFFR, OBFR, and €STR. If you are working with SONIA or other Actual/365 benchmarks, adjust your rate slightly: multiply the stated rate by (360/365) before entry, or divide your result by the same factor.

The spread field lets you model SOFR + X basis points contracts, which are now standard in corporate lending following the LIBOR transition. A typical investment-grade revolving credit might be priced at SOFR + 125 bps (1.25%), while a leveraged loan could carry a spread of 300–500 bps above SOFR.

One of the most common points of confusion in overnight-rate calculations is the 360-day year convention. While a calendar year has 365 (or 366) days, money-market instruments denominated in USD and EUR are historically quoted on an Actual/360 basis. This means the denominator in the interest accrual formula is always 360, regardless of whether the holding period spans a calendar year.

Using 360 rather than 365 slightly inflates the effective daily interest charge. For example, a 5% nominal rate under Actual/360 is economically equivalent to a 5.069% rate under Actual/365. When comparing overnight rates to bond yields — which use Actual/365 or 30/360 — this difference matters for precise analytics.

The formula used in this overnight rate calculator is:

Interest = Principal × Effective Rate × (Days ÷ 360)

where Effective Rate = (Overnight Rate + Spread) ÷ 100.

For the Effective Annual Rate, the calculator uses daily compounding over the 360-day year:

EAR = ((1 + Effective Rate ÷ 360)^360 − 1) × 100

This compounded figure is meaningful when rolling overnight positions day after day: the interest earned each day is implicitly reinvested. For a single overnight position, simple interest is the operative calculation; EAR becomes relevant for term investment benchmarking.

For longer holding periods, the calculator also projects weekly (7 days), bi-weekly (14 days), monthly (30 days), and annual interest, each computed as Principal × Effective Rate × (Period Days / 360). This allows quick stress-testing of different funding durations against the same benchmark rate.

For decades, LIBOR (London Interbank Offered Rate) served as the global floating-rate benchmark for trillions of dollars of financial contracts, from syndicated loans to interest-rate swaps. However, the 2012 rate-manipulation scandal revealed that LIBOR — based on banks' self-reported estimates rather than actual transactions — was vulnerable to manipulation. The Financial Conduct Authority announced that it would no longer compel banks to submit LIBOR quotes after June 2023.

The replacement in the US is SOFR, published daily by the New York Fed. Unlike LIBOR, SOFR is derived from roughly $1 trillion in actual overnight repo transactions each day, making it far more robust. Key differences include:

• Secured vs. unsecured: SOFR reflects secured borrowing (collateralized by Treasuries), so it typically trades a few basis points below EFFR.
• Backward-looking: SOFR is a backward-looking rate — it is published the morning after the transactions occur. Term SOFR rates (1-month, 3-month) exist for contracts that need a forward-looking reference.
• Spread adjustments: Legacy LIBOR contracts converting to SOFR include a fixed spread adjustment (e.g., 26.161 bps for 3-month USD) to account for the credit-risk difference between the two rates.

For treasury professionals and corporate borrowers, this transition means that new floating-rate debt is almost universally priced off SOFR today. This overnight rate calculator supports SOFR directly as well as EFFR and OBFR so you can model any USD overnight benchmark accurately.

The overnight rate calculator is used across a wide range of financial and treasury workflows. Here are the most common applications:

• Cash management: Corporations and money-market funds earn overnight interest on idle cash parked in repos or overnight deposit facilities. Even a single basis point difference on a $500 million balance generates $138.89 per day — this calculator makes it trivial to compare rates across money-market vehicles.
• Loan cost estimation: Floating-rate term loans and revolving credit facilities reprice daily or periodically against SOFR. Borrowers can use this tool to estimate their daily or monthly interest accrual at current rates plus their specific spread.
• Repo market analysis: Primary dealers, hedge funds, and banks that engage in repurchase agreements need to quickly calculate the dollar interest on a specific repo leg. Enter the repo collateral value as the principal, the repo rate as the overnight rate, and the repo term as days.
• Interest rate hedging: When sizing an overnight index swap (OIS), the fixed-rate payer needs to know the projected floating-leg cash flows. This calculator provides those projections across multiple time horizons simultaneously.
• Central bank policy monitoring: When the Federal Reserve adjusts the federal funds rate target, the immediate impact on borrowing costs can be estimated by changing the overnight rate input and observing how interest charges shift.
• Per-$1M rate comparisons: The calculator outputs interest per $1,000,000 for the specified number of days, letting traders compare competing quotes in a standardized format regardless of actual transaction size.

Because overnight rates move daily with central bank policy decisions and market conditions, having a fast, accurate calculator at your fingertips is essential for anyone working in fixed-income, corporate treasury, or institutional lending.