What is accrued interest?
Accrued interest is the amount of interest that has built up over time but may not have been paid yet. It shows up in many places: bonds between coupon dates, savings accounts before month-end, and loans between payment cycles. If money earns (or charges) interest daily, that interest accrues day by day.
This accrued interest calculator helps you estimate exactly how much interest has accumulated for a chosen date range. You can pick a day-count convention and an accrual method, then quickly compare outcomes.
How this calculator works
The calculator needs five key inputs:
- Principal: the starting amount of money.
- Annual interest rate: your yearly rate (APR or nominal annual rate).
- Start and end dates: the accrual period.
- Day-count convention: the rule for converting days into year fraction.
- Accrual method: simple or compounded at a selected frequency.
Formula used (simple interest)
For non-compounding periods, the formula is:
Accrued Interest = Principal × Rate × (Days / Day Basis)
Example: $10,000 at 5% for 90 days under Actual/365 gives approximately 10,000 × 0.05 × (90/365) = $123.29.
Formula used (compounding)
For compounding methods, this calculator uses:
Ending Balance = Principal × (1 + Rate / n)n × t
Accrued Interest = Ending Balance − Principal
Where n is compounding frequency per year and t is the year fraction from your day-count convention.
Day-count conventions explained
Day-count conventions are important in fixed-income and lending because they can change the calculated interest.
- Actual/365: uses actual calendar days, divided by 365.
- Actual/360: uses actual calendar days, divided by 360 (often seen in money markets and some loans).
- 30/360: treats each month as 30 days and each year as 360 days (common in some bond calculations).
Two products with the same nominal rate can produce different accrued interest if they use different day-count methods.
Common use cases
1) Bond transactions
When you buy a bond between coupon dates, you usually compensate the seller for accrued coupon interest. Estimating this correctly helps you understand the “dirty price” (clean price + accrued interest).
2) Savings and cash management
Interest on cash balances often accrues daily and is paid monthly. Tracking accrued interest can improve forecasting and help reconcile statements.
3) Loans and notes
Lenders and borrowers often need interest-to-date values for payoff quotes, refinancing, or accounting close. A reliable accrued interest estimate is essential.
Tips for better accuracy
- Match the calculator settings to your contract terms.
- Confirm whether your institution uses simple or compounding accrual between payment dates.
- Use the exact start and end dates from statements or trade confirmations.
- If this is for legal, tax, or audited reporting, confirm with your accountant or institution.
Quick FAQ
Is accrued interest always paid immediately?
Not always. Interest may accrue daily but only be paid monthly, quarterly, or at coupon dates.
Why does Actual/360 usually produce more interest than Actual/365?
With the same number of actual days, dividing by 360 gives a slightly larger year fraction than dividing by 365.
Can this calculator be used for negative rates?
This page is configured for zero or positive rates for simplicity. Some markets can have negative yields, but they require policy-specific treatment.
Final thoughts
Accrued interest may look like a small line item, but it can materially affect trading costs, payoff amounts, and financial reporting. Use the tool above to run fast comparisons, test scenarios, and build better intuition about how time and conventions impact returns.