What is interest capitalization?


September 17. Fineko/abc.az. In some cases, ordinary citizens who go to a bank or any other financial institution are answered with some terms that are difficult for an ordinary person to understand. One such term is interest capitalization.

What does the capitalization of interest mean?

Abc.az reports that capitalization of interest means a constant increase in funds in the amount of interest accrued to them. In other words, the interest accrued for each period is added to the principal amount, and the interest for the new period is calculated on the basis of this new amount (the total amount of the principal amount and the amount of accrued interest for the previous period).

Posted by Elmir Murad