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In financial or banking term, there is a subtle difference between interest accrued and interest due. for example, if you open a saving account, the interest start accruing as soon as you put any amount of money in the account. However, there may be rules for this account, saying for example, that you will get the interest only if you leave the money at least 3 months in the account. If you need urgently the money and withdraw it from your saving account before the 3 month period has passed, then you will not get any interest on this money. The interest has accrued on your account, but it is not due, because you withdrew the money to early.
Example:
3-month Saving account, 12% interest per year (1% per month):
- 1st of January: open account and deposit $1000
- 1st January to 28th of February: interest accrues on the $1000
- 1st of March: withdraw $500: half of the interest accrued is lost
- 1st of April: withdraw all the money from the account:
- the remaining $500
+ the interest due for 3 months on $500
(because this amount stayed at least 3 months in the account)
I hope this helps,
Excel-Hocam
Wiki User
∙ 14y ago
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