Accrual Rate
Barron's Banking Dictionary:
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Accrual Rate
Stated annual rate at which interest is calculated. On an Adjustable Rate Mortgage the accrual rate is determined from an independent market index, plus a margin, which is fixed at loan origination. The accrual rate is also called the note rate, coupon rate, or contract rate.
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Accrual Rate
Investopedia Financial Dictionary:
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Accrual Rate
The rate of interest that is added to the principal of a financial instrument between cash payments of that interest. For example, a six-month bond with interest payable semiannually will accrue daily interest during the six-month term until it is paid in full on the date it becomes due.
Investopedia Says:
Accrual rates are also used in nonfinancial contexts, such as for vacation or pension accrual rates. As well, they are often used in accrual accounting, which is used by most businesses; cash-basis accounting is most commonly used by individuals.
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Barron's Banking Dictionary
Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.
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