1. What is Accrued Interest?

Accrued interest is the amount of interest that has accumulated on a savings account or investment but has not yet been paid out. It represents the earnings on your principal amount based on the interest rate and time period.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Savings \) — Principal amount in dollars
• \( Rate \) — Annual interest rate in decimal form
• \( Time \) — Time period in years

Explanation: The formula calculates simple interest by multiplying the principal amount by the interest rate and the time period.

3. Importance of Accrued Interest Calculation

Details: Calculating accrued interest helps savers understand how much their money is earning over time, allowing for better financial planning and comparison between different savings options.

4. Using the Calculator

Tips: Enter the principal amount in dollars, interest rate as a decimal (e.g., 0.05 for 5%), and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus previously earned interest.

Q2: How do I convert APR to decimal?
A: Divide the percentage by 100 (e.g., 5% becomes 0.05).

Q3: Can I use this for partial years?
A: Yes, enter fractional years (e.g., 0.5 for 6 months).

Q4: Does this account for taxes?
A: No, this calculates gross interest before any taxes or fees.

Q5: How often is interest typically paid?
A: It varies by account - monthly, quarterly, or annually are common.