help with loss of interest please

diane118

hi my brother has a champion saver which he got in may he is going to lend me 10,000 for 1 month,
as he has to give a notise period of 60 days he is going to be loosing interest on it i said i would pay him back the interest he will be loosing which i think would be around £40,
he says no that it would be around £170 as he said he would loose his bonus for the year who is right please? i have posted the info from Nationwides site for you to work it out as i have not got a clue thanks Diane


Champion Saver
Rates effective from 01/11/2010
Bonus expiry date: 31/08/2011

An account with 60 days’ notice or 60 days’ loss of interest. The minimum opening balance is £1,000.
Balance

Min Max Free withdrawals per year Notice period/loss of interest for additional withdrawals AER% AER% including bonus* Gross p.a.% Net p.a.%
£1 £999 Unlimited 60 days** 0.10 n/a 0.10 0.08
£1,000+ Unlimited 60 days** 1.75 2.43 2.55 2.04

Rates for balances between £1 - £999 are fixed and rates for balances over £1,000 are variable.
*The bonus is a fixed rate of 0.80% gross p.a. until 31/08/2011. Interest and the bonus are calculated daily. For any day your balance goes below £1,000 you earn a fixed interest rate of 0.10% gross p.a./AER and no bonus.
**Withdrawals without notice are permitted with 60 days loss of interest.

Annisele

I think it would be best for your brother to ask Nationwide. Even if you go back to him and say "some guy on the internet/in the pub says that the answer is £x", he might not believe you!

I don't know whether the terms of the account have changed since your brother took out the account, but Nationwide's website now says:

If your balance goes below £1,000 you will earn a fixed interest rate of 0.10% gross p.a./AER* and no bonus.

So - will the £10k take your brother's balance below £1k or not? If it does - and if the terms of his account are the same as the terms NW is advertising now (which they might not be) - then you borrowing £10k might greatly reduce his interest for the whole year.

blinko

diane with all due respect its not going to be worth your time

pqrdef

The basic rate is determined monthly by looking at what other banks are doing, and the 0.8% bonus is added to that to get the Champion rate. Then this is paid on the daily balance, no strings.

So if the money is out for a month, you lose (1 month + 60 days) x £10000 x (the rate for the month in question). Near enough that's (percentage points) x 25. So for this month's rate, 2.55%, that's 25 x 2.55 = £63.75.

(That's assuming you want the instant withdrawal with 60 days loss of interest. If you can give the 60 days notice, then you only lose 1 month's interest so divide by 3)

pqrdef

Annisele wrote: »

you borrowing £10k might greatly reduce his interest for the whole year.

There's no "whole year" in this except that the 0.8% uplift in the interest rate calculation is guaranteed to be 0.8% for a year.

If the balance goes below £1000, then basically you get negligible interest on what's left in, for the period in question, which for a month costs from £0 to £2, depending how much is actually left in.

diane118

hi thanks for all you help he will still have over £1000 left in his saver account