accrued interest
C1Formal, Technical, Business
Definition
Meaning
The interest that has been earned on a loan, bond, or savings account but has not yet been paid to the investor or creditor.
In broader financial contexts, it can refer to any benefit or cost that accumulates over time but remains unrealized until a specific date or event. It embodies the principle of growth through accumulation.
Linguistics
Semantic Notes
The term is a compound noun where 'accrued' functions as a participial adjective. It inherently carries a temporal aspect, referencing the period between when interest begins to accumulate and when it is actually paid or recognized. It is a quantifiable, specific figure, not a general concept.
Dialectal Variation
British vs American Usage
Differences
No significant lexical differences. Spelling follows standard UK/US conventions for 'accrued' (same spelling). The concept and usage are identical in financial contexts across both regions.
Connotations
Neutral technical term in both varieties. Associated with formal finance, accounting, and legal documents.
Frequency
Equally frequent in UK and US professional finance, banking, and investment contexts.
Vocabulary
Collocations
Grammar
Valency Patterns
[Subject: account/bond/loan] accrues interest[Verb: calculate/pay] the accrued interestaccrued interest [Preposition: on/for] a bondVocabulary
Synonyms
Neutral
Weak
Vocabulary
Antonyms
Usage
Context Usage
Business
Central to financial statements and loan agreements. 'The quarterly report must include all accrued interest on corporate bonds.'
Academic
Used in economics and finance papers discussing time value of money. 'The model accounts for accrued interest in its valuation of the asset.'
Everyday
Rare in casual conversation. Might appear in personal banking contexts: 'I checked my statement to see how much accrued interest my savings account has earned.'
Technical
Precise term in accounting (accrual accounting), bond markets (clean vs. dirty price), and tax law. 'The bond's price is quoted clean, excluding accrued interest.'
Examples
By Part of Speech
verb
British English
- Interest continues to accrue on the fixed-term deposit until maturity.
American English
- The loan accrues interest daily, which adds up quickly.
adjective
British English
- You must declare any accrued interest from your savings to HMRC.
American English
- The accrued interest portion of the bond payment was substantial.
Examples
By CEFR Level
- My bank statement shows the accrued interest for this month.
- When you sell a bond, you get the price plus accrued interest.
- The accrued interest on the national debt represents a significant future liability for the government.
- Investors received a payment covering all accrued interest up to the redemption date.
- Under accrual accounting, the company recognised the accrued interest as revenue even though the cash hadn't been received.
- The tax implications of accrued interest on zero-coupon bonds can be complex.
Learning
Memory Aids
Mnemonic
Think of a snowball rolling down a hill ACCRUING snow—it gathers more and more. ACCRUED INTEREST is the financial 'snow' your money has gathered over time but you haven't picked up yet.
Conceptual Metaphor
INTEREST IS A GROWING ENTITY / WEALTH IS A PLANT (that bears fruit over time).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid direct calques like '*начисленный процент*' without confirming context. While sometimes correct, the official financial/accounting term is often 'накопленные проценты' or 'начисленные проценты'. The key is the 'unpaid, accumulated' aspect.
- Do not confuse with 'compound interest' (сложный процент), which refers to the method of calculation, not the payment status.
Common Mistakes
- Using 'accrued' as a noun (e.g., 'the accrued was high'). It is always an adjective in this phrase.
- Confusing 'accrued interest' with 'interest payable' or 'interest expense', which are related accounting categories.
- Misspelling as 'acrued' or 'accrued intrest'.
Practice
Quiz
In bond trading, what is the 'dirty price'?
FAQ
Frequently Asked Questions
It depends on perspective. For a lender or investor, it is an asset (interest receivable). For a borrower, it is a liability (interest payable).
Simple interest is a method of calculating interest. Accrued interest describes the *status* of that calculated interest—it has been earned but not yet paid. Simple interest can be accrued.
Tax laws vary by country. In many jurisdictions using accrual-based systems (like the UK on certain bonds or US for original issue discount bonds), you may owe tax on accrued interest even before receiving the cash payment.
No. By definition, interest is a charge for borrowing or a reward for lending. Accrued interest represents the positive accumulation of that charge/reward. A negative financial accrual would be a different concept, like an accrued loss or expense.