Bankers Rounding

In grade school, most of us learned that when the remainder at the rounding position is .5 or above we round up and if less than .5 we round down. When dealing with small amounts of data, this rounding method does not present a problem. However, when working with large sets of numbers, this rounding method produces results that will be skewed upwards. To address this problem, a new rounding method, sans the assymetrical frequency distribution, was developed.

This method is called the round-to-even rule or bankers rounding. With the round-to-even rule, when the remainder at the rounding position is .5, that number is rounded up when the number before it is odd, and rounded down when the number before it is even. For example, the number 6.5, using the round-to-even rule, would round down to the even number 6.0, while the number 7.5 would round up to the even number 8.0 -- hence the name round-to-even rule. The round-to-even rule is also referred to as bankers rounding because, not surprisingly, this rounding method is often used by bankers.

With, for example, statistical analysis or scientific research, the bankers rounding method produces results that on average round numbers up as often as they are rounded down. This prevents data from being skewed upward -- which was the problem with conventional rounding -- and from being skewed downward.

Mortgage Loan Calculator Plus has an amortization schedule creator which can be configured to use bankers rounding.