The financial or economic effect of the leap day in a calendar year. A leap year has 366 days, rather than 365 days. This aims to make up the fractional loss in time due to the difference between an astronomical year/ solar year (365.242190 days) and a calendar year (365). Every four years, the calendar is brought back to order by adding an extra day in the month of February (in the fourth year- e.g., 2024, 2028), as used to be done at the time of Julius Caesar (inventor of the Julian calendar).

In the realm of finance, the effect of a leap year can come up in the form of the so-called leap day interest– the extra day interest that a financial institution wins by accruing interest for one more day. Most institutions use simple interest methodology on a daily basis to calculate interest on loans and other types of financing (mortgages, personal loans, car loans, etc). For customers, it is an adverse scenario, as interest accrues, though fractionally, by one day more.

Pros and cons for a leap day vary from sector to another, and depend on the side to which the effect plays out. For a business, leap day means more work time, but also more expenses related to utilities and uses of resources, etc.