accrued interest
Definition
Accrued interest is the amount of interest that has built up on a loan or debt over time but has not yet been paid. Think of it like a tab running at a bar where the total keeps growing until you settle up. When you borrow money, interest accumulates every day even if your actual payment is only due once a month.
Example
If you take out a business loan and miss a payment, the lender will calculate all the interest that stacked up during that period and add it to what you owe. By the time you make your next payment, you will owe more than just the regular amount because of that accrued interest.
Watch Out
Accrued interest can snowball quickly on high-interest loans or lines of credit, so always check your loan agreement to understand exactly how and when interest starts accumulating.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.