Double interest on your money!!!

steadynerve

Does anyone know how banks calculalte daily interest on savings accounts? Do they use a closing balance at a certain time?
Alliance and Leister phone person said they used 5pm
First Direct person said they used quarter to midnight.

If they are both right does this mean i can do a faster payment between the two accounts at 5.05pm and then get interest added to the same amount twice once in each bank!!

Surely its not that simple.

Lokolo

Could do, but they calculate it daily. So transferring £1000 everyday will mean you get an extra 14p a day (at 5% interest).

Now, is it really worth it?

Also FPS have limits depending on the bank.

Milarky

Na! It won't work - all that means is if you move "the monies" between banks at certain times of day then you'd be docked interest (by the date of transfer not counting for either of the accounts) In effect there is 'friction' in the system and you lose interest because of it - not the other way around.

There are ways of earning double interest for short periods however. This depends on the particular interest paying features of certain accounts.

For example, Egg savings allows 'instant' deposit by bank debit card -and pays interest from that date. Yet the payment can take from 1 to 2 working days to leave the source account by this method. In that period you don't need any cash in the source account - as long as the overdraft covers any payment made to Egg.

Likewise writing cheques to Lloyds TSB on a different current account allows you to gain interest for the date of deposit (upto £1000 amounts) whereas the cash can't leave the source account for two working days due to the clearing cycle.

mrylandb

I think that the faster payments system has a 2pm deadline (at least that's what I was detailed on a presentation on the benefits of the FPS @ work)

steadynerve

I know that faster payments have a limit of £10,000 and are 24/7.

So I'm may be thinking now that if you make a faster payment anytime in the day even after 5pm with alliance and leicester that won't earn interest for the day but it will probably count for interest if it arrives at First dorect before just before midnight.

I'm guessing if you just do transfers between accounts in one bank - say savings to current its the balance at near midnight that counts when they do their overnight runs - or is it actually 5pm I wonder for A+L?

Any thoughts?

oldfella

how are weekends accounted for with FP - the sending bank records them as happening on the Monday, while the receiving bank dates them as saturday ?