Accrued Interest Definition

The accrued interest is the amount of interest which has built up, over time, on an account. For example, a savings account will receive an interest payment on a scheduled basis, usually monthly. As the interest payments accumulate, they are referred to in the aggregate as the account’s accrued interest.

Likewise, a credit card’s monthly interest charged accrues to the account. For example, a credit card account with a $100 debit balance may accrue an interest charge of $3 at the end of each month. For high interest credit card accounts the accrued interest of several years, in the aggregate, can be more than the original payment.

Please note: If you do not consolidate your debts through a debt consolidation or personal loan or related program (that requires scheduled payments with a fixed term), it is highly important that you always make more than your minimum payments on your credit cards. A credit card is designed to stretch out your payments for as long as possible in order to collect the maximum amount in interest payments! Don’t fall into the trap. Pay your debt down whenever possible.