Ordinary Annuity vs. Annuity Due: What's the Difference?

The Difference Between Ordinary Annuity and Annuity Due

By Catherine Brock – Updated Jan 13, 2025 at 5:12 PM

Key Points

Ordinary annuities pay at the end of a period.
Annuities due pay in advance or at the beginning of a period.
Because of the difference in payment timing, the present value of an annuity due will be higher than that of an ordinary annuity with otherwise equal terms.

How does an ordinary annuity differ from an annuity due? Both are contractually obligated payment series, but they differ in the timing of the payment. An ordinary annuity pays at the end of a period, while an annuity due pays in advance.

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About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Catherine Brock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Netflix. The Motley Fool has a disclosure policy.