Anticipated Interest

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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.

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