Why Is Interest Accrued?

The amount of interest earned on a debt, such as a bond, but not yet collected, is called accrued interest. Interest accumulates from the date a loan is issued or when a bond's coupon is made. A bond represents a debt obligation whereby the owner (the lender) receives compensation in the form of interest payments.

Why is interest accrued on a note?

Accrued interest on a note payable is interest that has accumulated that you have yet to pay. A business typically records accrued interest at the end of an accounting period to update its accounts and financial statements.

Do I have to pay accrued interest?

That's okay, you are not required to pay the accrued interest while in school or during your grace period, the interest will be capitalized (added to the principal balance of your loan) when you enter repayment. But if you can afford to pay your interest, you should! It will save you money in the long run!