Mortgages Analyzed
Mortgages Analyzed
Mortgages Analyzed
 
Accrued Interest

What is Accrued Interest?

Definition
The interest earned for the period of time that has elapsed since interest was last paid.
What It Means
Accrued interest is the interest amount that is earned/accrued since the last payment was made. If you pay accrued interest then the outstanding amount is the unpaid principal amount. Accrued interest becomes interest payable on the due date. For example, assume you make payment on the first of each month for the previous month's interest. On 15 January accrued interest would be the amount of interest from the 1st Jan to 15th Jan. This amount is not due on 15h Jan, instead the entire January's interest will be due on Feb 1.
Category
Finance

Related Terms

  • Amortization: Amortization is the process of establishing equal periodic payments such that the payments will pay off the entire principal and interest by the end o... Read More
  • Interest Rate: The rate at which periodic interest will be calculated.... Read More
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