FTB-C000714 / Financial concept

Interest capitalization

Interest capitalization adds accrued interest to the principal on which subsequent interest is calculated.

Also known ascapitalizing interest

Intermediate 1 linked topicEvidence-reviewed

Definitions

In plain terms

It is the event that changes the interest-bearing base, rather than merely measuring interest already earned.

Technical

D30 capitalization moves the accrued pool A into capitalized pool C, changing the subsequent interest base. This is a model-state transfer, not a customer journal unless separately posted.

Scope

This bank-interest meaning excludes capitalization of borrowing costs into an asset under a separate accounting framework.

Examples

  • A synthetic 40-cent accrued amount joins the interest-bearing pool at the configured capitalization boundary.

Common misconceptions

  • Accrual does not always mean immediate capitalization or payment.

Concept relationships

Prerequisites

Related

Where this concept is used

Evidence and governance

  1. Regulation DD, 12 CFR 1030.7: Payment of interest Consumer Financial Protection Bureau · official standard

    Supports: preferred label, short definition, variant distinction

    Limits: Not global product law; the glossary makes no compliance finding or mandated frequency claim.

  2. D30 glossary teaching-profile scope, Batch 013 The Fintech Builder · internal governed contract

    Supports: technical definition

    Limits: No independent regulatory mandate, real-bank dataset, service execution, external witness or production assurance is claimed.

Reviewed by
fintech-builder-batch-013
Last reviewed
2026-10-27
Next review
2027-10-27
Record status
evidence reviewed

This record is evidence-reviewed and readable, but not yet promoted to published — it is served noindex,follow and excluded from the sitemap.

Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.