calculating interest

mrposhman

Hopefully someone can help.

I have a fair amount of money in my natwest savings direct account (been meaning to switch to a better rate) and am trying to calculate my interest.

last month was a bit strange, I had no balance upto 8th July so I calculated the charges from there. I calculated the amount that natwest credited me with as being from 8th July - 30th July despite natwests guidelines saying that its 7th July - 3rd August payable on the 4th so the interest seemed to be calculated incorrectly. I have just been credited the amount for august bizarrely the charging period as stated in natwests documentation is 4th August to 31st Aug payable 1st Sep and this was paid to me on Friday which I thought was a little strange. Whats more I can't get it to match off to any of the days.

When calculating the daily rate based on the net rate, last month I divided the annual net rate by 365, is this correct?

Also, one other point, is the natwest advantage gold few payable in advance or in arrears?

Thanks

Lokolo

This year was a leapyear so they may be using 366.

Also banks (depends on which) will round up, down or truncate, try fiddling around.

If you give us the actual figures we could help?

YorkshireBoy

mrposhman wrote: »

When calculating the daily rate based on the net rate, last month I divided the annual net rate by 365, is this correct?

I'd use the gross p.a. rate to calculate daily interest (because interest isn't taxed until it's paid), and then multiply the total by 0.8 to get the net interest to be paid.

Day 1: balance x gross p.a.rate / 365 =
Day 2: balance x gross p.a.rate / 365 =
Day 3: balance x gross p.a.rate / 365 =
etc
etc

Sum up and then multiply the total by 0.8

If you have a static balance, then

balance x gross p.a. rate / 365 x n x 0.8 =

where n = number of days in statement period

Also, one other point, is the natwest advantage gold few payable in advance or in arrears?

Can't answer that one. Doesn't it say in the T&C's?

mrposhman

YorkshireBoy wrote: »

I'd use the gross p.a. rate to calculate daily interest (because interest isn't taxed until it's paid), and then multiply the total by 0.8 to get the net interest to be paid.

Day 1: balance x gross p.a.rate / 365 =
Day 2: balance x gross p.a.rate / 365 =
Day 3: balance x gross p.a.rate / 365 =
etc
etc

Sum up and then multiply the total by 0.8

If you have a static balance, then

balance x gross p.a. rate / 365 x n x 0.8 =

where n = number of days in statement periodCan't answer that one. Doesn't it say in the T&C's?

thanks I will try using the gross rate. It seems strange that they don't appear to keep to their charging periods though too which is a pain. I will try this way and if not i will post the details up.

I thought the advantage gold was in advance and thats what the guy told me when I cancelled in July. I cancelled about 28th July, he told me that my last payment would be on 31st July (charged last day of the month) and said this would be a touch less than the £12.95. I was charged £12.95 but as the saving was going to be peanuts I didn't bother claiming anything back. They then charged me £11.10 at the end of August which suggests its payment in arrears. I will have another look at their T&C's.

YorkshireBoy

mrposhman wrote: »

It seems strange that they don't appear to keep to their charging periods though too which is a pain.

My 6.5% AER A&L current account is the same. It seems to move by a few days (both ways, ie some are 'short' and some are 'long' months) each month.

I will try this way and if not i will post the details up.

If you had a dynamic balance throughout the month you'll have to check your T&C's as to when your money starts to earn interest. Some providers pay interest from the day of receipt, whereas others pay interest from the day after receipt. This may be throwing your calculations out?

mrposhman

Ok I still can't get it to work out, just a quick query that has popped into my mind. The account states that the interest rates are tiered below.

£10,000-£24999 = Gross rate = 3.95% Net = 3.10%
£0 - £9999 = Gross = 3.90% Net = 3.06%

I have assumed that this means that if I have a balance greater than £10k then I would get 3.95% on the whole balance but maybe this is where I'm going wrong. Do you guys think I should be inputing a tiered calc into my excel calculation for the first 9999 at 3.9% and the remainder at 3.95%??

mrposhman

YorkshireBoy wrote: »

My 6.5% AER A&L current account is the same. It seems to move by a few days (both ways, ie some are 'short' and some are 'long' months) each month.If you had a dynamic balance throughout the month you'll have to check your T&C's as to when your money starts to earn interest. Some providers pay interest from the day of receipt, whereas others pay interest from the day after receipt. This may be throwing your calculations out?

Yeah I'm aware they vary, but what they pay seems to vary from the published charging periods. Does this happen with your A&L account?

I mean the charging period for august should have finished today with interest paid tomorrow but I was paid the interest on friday.

I find this a bit strange, whats the point in publishing periods if they just do what they want anyway.

mrposhman

Ok I think it was my assumption above.

For the first £10k I have used the lower rate and I'm out by about 1p which I can live with!!

Thanks for your help guys but I'm still confused by their published charging periods.

Oh and I was badly advised by the manager when I cancelled my advantage gold account, it looks like its payment in arrears.

pam0

yeah it is in arrears. when u cancel u still have to pay another 12.95 for the previous month and for this period also (may be less than a full months 12.95 depending how far through the month this was)