Anticipated Interest

AAA

DEFINITION of 'Anticipated Interest'

The amount of interest that a savings vehicle will accrue by some future date, assuming there are no deposits or withdrawals during the intervening period. Anticipated interest factors in compound interest. For example, a one-year, $1,000 certificate of deposit with a 2% annual interest rate would have anticipated interest of $20.15. Anticipated interest can also describe to the total amount of interest that is expected to be paid on a loan with a specified payoff date, such as a mortgage or car loan. If the loan is repaid early, the actual interest will be less than the anticipated interest.

INVESTOPEDIA EXPLAINS 'Anticipated Interest'

An investor putting a lump sum into a high-yield savings account, such as those typically offered by online banks, would have a greater amount of anticipated interest than someone putting the same sum into a traditional savings account, which typically pays a rock-bottom interest rate. Regardless of the savings vehicle, it is important to understand how the bank calculates compound interest (e.g., daily, monthly, semi-annually) to know how much interest you can anticipate.

RELATED TERMS
  1. Compound Interest

    Interest calculated on the initial principal and also on the ...
  2. Interest

    1. The charge for the privilege of borrowing money, typically ...
  3. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  4. Interest-On-Interest

    The interest that is earned upon the re-investment of interest ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when ...
  6. Imputed Interest

    A term that describes interest that is considered to be paid ...
Related Articles
  1. Bonds & Fixed Income

    Accelerating Returns With Continuous Compounding

    Investopedia explains the natural log and exponential functions used to calculate this value.
  2. Economics

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  3. Investing Basics

    Understanding The Time Value Of Money

    Find out why time really is money by learning to calculate present and future value.
  4. Mutual Funds & ETFs

    Money Market Mutual Funds: A Better Savings Account

    An good alternative to the traditional savings account is the money market mutual fund. It's easy, safe and has better returns.
  5. Savings

    Why Do Credit Cards Expire?

    Credit cards expire for more reasons than you could imagine – including, so you don't forget you have the card.
  6. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  7. Savings

    Best (And Worst) Places To Change Money In Vegas

    Skip the booths at the airport and find an ATM when you want to exchange currency. Or try to use your credit card. Another good source: casinos!
  8. Bonds & Fixed Income

    Should Junk Bond ETFs Be a Part of Your Portfolio?

    Should junk bonds be a part of your portfolio? Here's what you need to know.
  9. Savings

    How Safe Is Venmo And Why Is It Free?

    Venmo is a digital wallet that allows users to send money with ease. Millions use the service, but is it actually safe?
  10. Economics

    What is the Income Effect?

    In economics, the income effect is the change in the consumption of goods caused by a change in income, whether income goes up or down.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center