PPI Reclaiming Discussion part 4

amersall

hi cocker, will this help?:rotfl::rotfl::rotfl::eek:
Compound interest

Main article: Compound interest
Compound interest is very similar to simple interest; however, with time, the difference becomes considerably larger. This difference is because unpaid interest is added to the balance due. Put another way, the borrower is charged interest on previous interest. Assuming that no part of the principal or subsequent interest has been paid, the debt is calculated by the following formulas:
where Icomp is the compound interest, B0 the initial balance, Bm the balance after m periods (where m is not necessarily an integer) and r the period rate.
For example, if the credit card holder above chose not to make any payments, the interest would accumulate

robbedofmymoney

Originally Posted by cocker100
Hi all,

I'm after some more advice regarding compound interest.

Quick update on case:

Submitted claim for mis-selling of PPI on former Morgan Stanley credit card (now defunct) in February to Barclaycard. To my surprise, they responded with an offer of settlement in early April for approx £1,500. However, this only included the past 6 years worth of statements.

Wrote back asking for refund back to start of account and have now received a revised offer of approx £3,000. they rekon that this sum includes both compound interest and additional statutory 8% interest.

The problem is that their compound interest calculations differ greatly to mine. I used one of the many compound interest calculators online to compile my set of figures, but they say that it is wrong and have provided me with what they believe are the correct figures. They state that their calculations are in line with how the FOS expect them to calculate them.

Here is an example:

PPI payment 21st April 2004 of £17.71 @ APR of 20.9% =
Compound interest of £4.62

However I work it out as compound interest of £43.41!!!! (A few weeks out now as figure calculated earlier in month))

As you can see, a massive difference and all their figures are tiny in comparison to mine. What I want to know is have I calculated correctly or are they trying to fleece me?

I dont want to short change myself by accepting their offer and missing out on the true value of the claim as it would be more than double their current offer if i'm right and refer to FOS. But if I am wrong, I would have to wait for FOS to adjudicate for nothing, when I could have settled now.

Any advice would be great!!!

Cheers, Cocker:)

i had the same query with mine, however upon discussing it with the lender it appeared that the premium was paid for first from the payments i made, this is the order in which they applied the payments, so the ppi amount did not attract a lot of interest,

upon reading the samll print on my agreement it did say this so on my claim it was correct.

8% interest is only paid on credit card ppi if after it has been removed month on month your account would be in credit, then the 8% is applied ot the amount the account is in credit.

by all meens ask them why the compound interest is so low, and if you still disagree you will need to refer this to the FOS.

i had originally calculated it to be higher until i read the small print. credit card ppi reclaim amounts are much more difficult to calculate than loan amounts as the account could go in and out of credit over time.
you will need to be an accountant and have all the history going back to day oneand then know which payments were applied where and in what order :eek:

i hope this helps

mystery_united

Cocker

I have a similar issue with the Halifax - I am awaiting their response on how they calculate the interest.

However - I would of thought that it is relatively straight forward to work out a more accurate figure - The figure you have been given does seem a little low.

I have made a simple spreadsheet ( it took a little while to input all the fiqures though) it takes into account the monthly payments maide on the account the balance on the day the PPI was and roughly the day the PPI was paid off.

So in Practice you wouldn't still be paying for the PPI added to your account on 21st May 2004 - Depending on how much you have paid into the account, you would of possibly paid this off sometime 2 years ago.

amersall

thank you robbedof mymoney and mysteryunited

cocker100

Thanks for all the replys guys!!!:T

Still confused about all this though. Having read through loads of pages regarding compound interest and credit card ppi reclaims, most people who are successful seem to get much more in interest than this.

The way I thought it worked was that if the mis-sold ppi was added to your account balance and then not paid off, interest accumilates on this each month after, meaning that you pay interest upon interest upon interest as each month goes by. This is because interest is charged on the full balance of the card each new month. This is why it multiples up so fast because interest is charged 12 times a year and therefore compounded monthly.

Over on CAG, some people had started court proceedings against creditiors for mis-sold ppi and have used online compound interest calculators (like what I used) to work out the value of their claim and have submitted these figures to the courts. This process seems to be verified by some of the more experienced caggers too. Surely compound interest is compound interest and can only be calculated one way??

What if I accept their offer as part settlement and contact FOS for any extra interest due. Or by signing their acceptance form, would that mean I couldn't claim any more?

All very confusing!!!

Cocker:)

cocker100

Just to provide some more rough figures:-

Account opened in 2000 with ppi applied from the start, resulting in approx £2,000 paid in ppi payments.

Barclaycard claim that the total compound interest for this amount is only £260 (approx), with a further £600 in simple 8% interest.

This figure just doesn't seem correct given that the account opened 10 years ago and the interest rates ranged from 16.9% to 20.9%.

Cocker:)

mystery_united

Hi Cocker

Totally agree with what your saying with regards interest, However you do need to be careful when working this out - That's what robbed is saying.

You make monthly payments off your balance and so at some point each of the PPI payments will of been paid off. So to calculate the Compound interest you really need to know the date that this came PPI premium came off your balance. You could then argue that because you have been deprieved of the money then 8% Interest should be paid on that total.

At the end of the day only you can make the decision about wheter to accept the offer as a partial settlement and then try and recoup the interest that you think you are due - I had no choice In that they paid of the money against my CC as I am in arrears, I am still trying to sort out the interest side of things.

Good luck and keep us informed of your decision :beer:

buffbuff

Hi, I sent my acceptance form for my ppi claim back 2 weeks ago, but i got a letter today saying they have to confirm my signature by taking some form of photo id to a rbs branch before they release my money,i did this today and they took a photocopy of my licence and they signed it, but the signature on my provisional driving licence is alot different to the one i sent on the acceptance form, because i did it when i was 16 i am now 22 and in my job i sign alot of things so it has changed, and i dont have any other form of photo id with a signature on it. i explained this to the lady at the branch but she said i will just have to wait and see.

Id of thought that because i had shown them my photo id and the branch signed it that they would accept i am who i say i am ?

Does anyone know what to do if they come back saying they cant accept it ?

Or has anyone had this problem ?

Thanks

cocker100

buffbuff wrote: »

Hi, I sent my acceptance form for my ppi claim back 2 weeks ago, but i got a letter today saying they have to confirm my signature by taking some form of photo id so to a rbs branch before they release my money,i did this today and they took a photocopy of my licence and they signed it, but the signature on my provisional driving licence is alot different to the one i sent on the acceptance form, because i did it when i was 16 i am now 22 and in my job i sign alot of things so it has changed, and i dont have any other form of photo id with a signature on it. i explained this to the lady at the branch but she said i will just have to wait and see.

Id of thought that because i had shown them my photo id and the branch signed it that they would accept i am who i say i am ?

Does anyone know what to do if they come back saying they cant accept it ?

Or has anyone had this problem ?

Thanks

Hiya,

RBS did this with me when I reclaimed on an old loan I had with them from 1999. I asked the FOS why RBS required signature confirmation and they said it was probably because the signature on the acceptance form and the one on the original loan agreement were slighty different.

I too took my driving licence to my local RBS branch and the woman photocopied it and sent it off in their internal mail. I received the cheque a couple of weeks later.

I wouldn't worry too much. If you have shown ID with your photogragh on and the photogragh is a good likeness, then I cant see why they would question it.

Cocker:)

cocker100

mystery_united wrote: »

Hi Cocker

Totally agree with what your saying with regards interest, However you do need to be careful when working this out - That's what robbed is saying.

You make monthly payments off your balance and so at some point each of the PPI payments will of been paid off. So to calculate the Compound interest you really need to know the date that this came PPI premium came off your balance. You could then argue that because you have been deprieved of the money then 8% Interest should be paid on that total.

But this is impossible as the PPI is just part of the total balance of the card.

There are only three types of balance on a credit card.

Purchases (This would include PPI)
Cash Advances
Balance Transfers

New transactions are simply included in one of these 3 categories and added to that rolling total.

There is no way of telling when each purchase has "dropped off" the balance so to speak. Statements just provide a total balance and a breakdown of the balance for each of the three categories, as each category is usually charged at a different interest rate.

Cocker:)