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. Compound Interest

    Compound Interest is interest calculated on the initial principal ...
  3. Periodic Interest Rate

    The interest rate charged on a loan or realized on an investment ...
  4. Stated Annual Interest Rate

    The return on an investment that is expressed as a per-year percentage, ...
  5. Effective Annual Interest Rate

    Effective Annual Interest Rate is an investment's annual rate ...
  6. Call Deposit Account

    A bank account for investment funds that offers the advantages ...
Related Articles
  1. Investing

    Understanding the Power of Compound Interest

    Understanding compound interest is important for both investing and borrowing money.
  2. Personal Finance

    How Interest Rates Work on Savings Accounts

    Here's what you need to know to grow your rainy-day fund.
  3. Investing

    4 Ways Simple Interest Is Used In Real Life

    Simple interest works in your favor when you're a borrower, but against you when you're an investor.
  4. Managing Wealth

    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.
  5. Investing

    Learn Simple and Compound Interest

    Interest is defined as the cost of borrowing money, and depending on how it is calculated, it can be classified as simple interest or compound interest.
  6. Personal Finance

    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?
  7. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
  8. Personal Finance

    The 7 Best Places to Put Your Savings

    You work hard to put your money away for the future, but where should you keep it?
  9. Personal Finance

    Where To Put Your Cash: Call Deposit Vs Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
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. How can I tell if a loan uses simple or compound interest?

    Learn the differences between simple and compound interest and how you can use mathematical calculations and lender disclosures ... Read Answer >>
  3. What is the difference between compounding interest and simple interest?

    Simple interest is calculated by multiplying the principal amount by the interest rate and the number of periods in a loan. ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  3. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  4. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  5. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  6. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
Trading Center