What’s the difference between earned, accrued & paid interest?

August 31, 20151 min read
What’s the difference between earned, accrued & paid interest?
Share on facebookShare on TwitterShare on Linkedin

Earned interest is the rate of interest that an investment is earning for you. If you invest $1,000 in an investment that earns 10% per year, for example, your earned interest that year will be 10%, or $100.

Accrued interest, or interest balance, is interest that an investment is earning, but that you have not collected yet. In a savings account, for example, interest on your balance accrues every day, but is only credited to your account at the end of the month. Your savings are earning that accrued interest every day, but you can’t spend the interest until the bank puts it into your account. A YieldStreet investment that pays interest monthly works the same way. You accrue interest all month and you receive it on the payment date.

Paid interest is interest that you have received as payment into your account; at that point it is no longer accrued interest.

Invest in Alternatives Today