DEFINITION of 'Arrears'

Overdue debt, liability or obligation. An account is said to be "in arrears" if one or more payments have been missed in transactions where regular payments are contractually required, such as mortgage or rent payments and utility or telephone bills.


The term "in arrears" does not necessarily have a negative connotation in certain contexts such as fixed-income instruments, where it may indicate that interest payments are simply made at the end of a period. For example, mortgage interest in the U.S. is paid in arrears, which means that in the case of monthly payments, each payment covers principal repayment and mortgage interest for the month preceding the payment due date.

  1. Mortgage Interest

    The interest charged on a loan used to purchase a residence. ...
  2. Default

    1. The failure to promptly pay interest or principal when due. ...
  3. Periodic Interest Rate

    The interest rate charged on a loan or realized on an investment ...
  4. Arrearage

    An amount on a loan, cumulative preferred stock or any credit ...
  5. Arrears Swap

    An interest rate swap in which the floating payment is based ...
  6. Line Graph

    A graph that measures change over time by plotting individual ...
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