Adding accrued interest to the amount on which later interest is calculated. The contract determines dates and frequency.
Why this matters
The term is useful only when the calculation basis, dates and contract conditions are stated.
Example
Adding 1,000 roubles to 100,000 makes the next base 101,000.
Common mistake
Assuming “monthly” means the same formula at every bank.
Russia; general banking context.
Russian source references retained.
Educational material is not individual investment, legal or tax advice.
