1. What is Accrued Interest?

Accrued interest is the amount of interest that has accumulated on a savings account or investment but has not yet been paid out. It represents the interest earned between payment periods.

2. How Does the Calculator Work?

The calculator uses the simple accrued interest formula:

Where:

• \( Principal \) — The initial amount of money
• \( Rate \) — Annual interest rate (in decimal form)
• \( Days \) — Number of days interest is being calculated for
• \( 365 \) — Number of days in a year (use 366 for leap years)

Explanation: The formula calculates how much interest would accumulate over a specific period based on the principal amount and annual interest rate.

3. Importance of Accrued Interest Calculation

Details: Understanding accrued interest helps savers and investors track their earnings between payment periods, compare different savings options, and plan their finances more effectively.

4. Using the Calculator

Tips: Enter the principal amount in dollars, the interest rate as a decimal (e.g., 0.05 for 5%), and the number of days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between accrued interest and compound interest?
A: Accrued interest is simple interest calculated on the principal only, while compound interest includes interest on both the principal and previously accumulated interest.

Q2: How do I convert APR to a decimal?
A: Divide the percentage by 100 (e.g., 5% becomes 0.05).

Q3: Should I use 365 or 366 days?
A: For most purposes, 365 is standard. Use 366 only if the entire period falls within a leap year.

Q4: Can this calculator be used for loans?
A: Yes, it can calculate simple interest on loans, but most loans use more complex amortization methods.

Q5: How often is accrued interest typically paid?
A: Payment frequency varies by account - monthly, quarterly, or annually are common.