Anticipated Interest

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.

BREAKING DOWN '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. Anticipated Balance

    The amount that a savings account will have at some future date, ...
  2. Periodic Interest Rate

    The interest rate charged on a loan or realized on an investment ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal ...
  4. Continuous Compounding

    The process of earning interest on top of interest. The interest ...
  5. Deposit Interest Rate

    The interest rate paid by financial institutions to deposit account ...
  6. Gross Interest

    The annual rate of interest to be paid on an investment, security ...
Related Articles
  1. Credit & Loans

    All Your Questions About Loan Interest Rates

    If you think interest rates don’t really matter -- think again. Interest rates have a huge impact on your finances.
  2. Investing

    How does Compound Interest Work?

    A quick way to understand the impact of compound interest is to ask yourself if you’d rather receive $100,000 a day for a month, or start with a penny on day one and double it every day for those ...
  3. Economics

    Explaining Interest

    Interest is the price charged to borrow money, and is typically expressed as a percentage of the principal, or the amount loaned.
  4. Savings

    The Difference Between Compounding Interest and Simple Interest

    Interest is the cost a borrower pays to use someone else’s money. Interest can be either simple or compounded.
  5. Savings

    How Interest Rates Work on Savings Accounts

    Here's what you need to know to grow your rainy-day fund.
  6. Personal Finance

    Dissecting the Simple Interest Formula

    Simple interest ignores the effect of compounding: it's only calculated on the principal amount. This makes it easier to calculate than compound interest.
  7. Savings

    Find the Best Savings Account Rates

    You know how to spot the highest interest rate, but how do you really get the best deal on savings accounts?
  8. Savings

    Teaching Financial Literacy To Tweens: Earning And Paying Interest

    The concepts of interest, compounding and the time value of money can be a tricky concept for kids to understand, but the lessons are worth it.
  9. Investing

    The Effective Annual Interest Rate

    The effective annual interest rate is a way of restating the annual interest rate so that it takes into account the effects of compounding.
  10. Economics

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
RELATED FAQS
  1. What formula can I use to calculate interest on interest?

    Find out more about compounding interest, what it measures and how to calculate the amount of compound interest accrued using ... Read Answer >>
  2. What does it mean when interest "accrues daily?"

    Find out what it means when an interest-bearing account accrues interest daily and how different compounding periods change ... Read Answer >>
  3. What does it mean to capitalize accrued interest?

    Understand what it means when a company capitalizes accrued interest. Learn what constitutes accrued interest and what constitutes ... Read Answer >>
  4. How do mutual funds compound interest?

    Learn how mutual funds can grow wealth over time through the magic of compound interest by reinvesting dividends back into ... Read Answer >>
  5. What economic factors affect savings account rates?

    Find out how supply, demand and central bank policy all affect savings account rates offered by banks for extra deposits ... Read Answer >>
  6. How can I calculate compounding interest on a loan in Excel?

    Find out about compound interest and how to use the compounding interest formula in Microsoft Excel to calculate the compound ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center