What is accrued interest?

By paying accrued interest when purchasing a bond, investors ensure they receive the full interest payments, even if they acquired the bond after the issue date. Accrued interest is the interest that has accumulated up to the date of purchase. This accrued interest is paid in addition to the purchase price of the bond—and in return, the full amount is paid out on the next interest payment date. For example, someone who buys a bond one week after the issue date pays the interest accruing for that week as accrued interest in addition to the purchase price. In return, with the first interest payment of the bond, they receive the same interest as an investor who subscribed to the bond on the issue date, i.e. one week earlier. Bond investors can find out what accrued interest applies to PCC bonds in the deposit table.