What are Interest Period and Interest Frequency?

Interest Period - Interest Period is a date period within which interest is accumulated until the end of the period, before getting paid to the lender.

Commonly used Interest Periods are:

• Monthly - Interest is accumulated to one month before getting paid.
• Quarterly - Interest is accumulated to 3 months before getting paid.
• Semiannually - Interest is accumulated to 6 months before getting paid.
• Annually - Interest is accumulated to one year before getting paid.

Interest Frequency - Interest Frequency is the number of Interest Periods in a year. In other words:

Interest Frequency = 12, if Interest Period is Monthly. 
Interest Frequency = 4, if Interest Period is Quarterly. 
Interest Frequency = 2, if Interest Period is Semiannually. 
Interest Frequency = 1, if Interest Period is Annually. 

Some Day Count Conventions will adjust Days_in_Year based on days in the current Interest Period, so that the Accrued Interest for each Interest Period stays with same value.

For example, the US Treasury issues 30-year bonds with simple interest rates and pays fixed interests twice a year (Interest Frequency of 2).

If you bought a $1,000.00 US Treasury 30-year bond with an interest rate 5.0% on January 1, 2026, you will receive interests as shown below:

July 1, 2026: $25.00 for period of January 1, 2026 to July 1, 2026 
  Days_in_Period = 181
  Days_in_Year = 2 x Days_in_Period = 2 x 181 = 362 
  Accrued_Interest = $1,000.00 x 5.0% x 181 / 362 = $25.00  

January 1, 2027: $25.00 for period of July 1, 2026 to January 1, 2027 
  Days_in_Period = 184
  Days_in_Year = 2 x Days_in_Period = 2 x 184 = 368 
  Accrued_Interest = $1,000.00 x 5.0% x 184 / 368 = $25.00

...  

As you can see from this example, US Treasury uses a Day Count Convention that changes Days_in_Year from period to period.

Days_in_Year = Interest_Frequency x Days_in_Period 

where: 
  Days_in_Period: Number of days in the current Interest Period

If you want to know the Accrued Interest of the bond in the date range of January 1, 2026 to January 16, 2026, you can follow the same Accrued Interest formula given in the previous tutorial:

Accrued_Interest 
                                Days_in_Range 
  = Principal × Interest_Rate × -------------
                                Days_in_Year 

  = $1,000.00 x 5.0% x 15 / 362 = $2.0718232044199 = $2.07 

where: 
  Days_in_Range = 15 
  Days_in_Year = Interest_Frequency x Days_in_Period = 362 
  Interest_Frequency = 2 
  Days_in_Period = 161  

The Interest Period where the Accrued Interest is being calculated is also referred as the Accrual Period. The Interest Frequency is also referred as the Accrued Frequency.

⇒ Accrual Range/Period/Year

⇐ What Is Day Count Convention

⇑ Introduction to Day Count Convention

⇑⇑ Day Count Conventions