LTSB VANTAGE - question

bigfreddiel

these are the t&c's - well part of them:

For each month that you meet the Vantage conditions, you will qualify for credit interest in that monthly billing period which runs from the second working day of a month to the first working day of the next month. This means we will work out interest on a daily basis at the relevant Vantage interest rate from the second working day of that month and pay it to your account at the end of the first working day of the next month.

So do you get interest for the period between the first working day of the month and the second working day of the month - the above suggests youdon't? If not we are missing 12 days interest a year.

Now I have £7k in my account - I pay in and out £1k - and on 1st Feb I receiveed £16.88 - hows that calculated - please show me where I am going wrong

Interest Period 5 Jan 2011 (2nd working day of month) to 1st Feb = 28 days inclusive

Interest per day = .04 x .8 / 365 x 7000 = 61.36p, i.e. 4% less 20% tax divided by no of days in the year multiplied by the amount in the account.

Interest for January = 61.36p x 28 = £17.18

If I counted the days wrong and its not inclusive its 61.36p x 27 = £16.56

I actually got £16.88 - explain that please - note: there may be small rounding errors in the above.

cheers fj

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whu

I asked the same question on the vanatage thread about whether £16.88 is correct and it is.:)

oldfella

dec interest was paid inclusive of the new years day holiday - I think it was paid inclusive of the 3 Jan

bigfreddiel

oldfella wrote: »

dec interest was paid inclusive of the new years day holiday - I think it was paid inclusive of the 3 Jan

so the t&c's are wrong then?

fj

bigfreddiel

whu wrote: »

I asked the same question on the vantage thread about whether £16.88 is correct and it is.:)

i'm sure it is correct, but could you show how its worked out please?

fj

bigfreddiel

oldfella wrote: »

dec interest was paid inclusive of the new years day holiday - I think it was paid inclusive of the 3 Jan

wrong period - i'm talking about jan-feb not dec-jan.

Interest for dec-jan was credited to my account on 4 Jan 2011 - as defined in the t&c's i.e. the first working day of the month - so again according to the t&c's the next interest period starts on the 5th Jan - the second working day of the onth which is the period i'm querying.

cheers fj

YorkshireBoy

bigfreddiel wrote: »

...could you show how its worked out please?

You earn interest at the gross p.a. rate, not the AER.

£7,000 x 3.93% / 365 x 28 x 0.8 = £16.88

bigfreddiel

YorkshireBoy wrote: »

You earn interest at the gross p.a. rate, not the AER.

£7,000 x 3.93% / 365 x 28 x 0.8 = £16.88

Cheers YB - actually I just twigged that I was using an annual rate and not a monthly equivalent rate - fantastic.

Could you show how to convert an annual rate of 4% gross to a monthly equivalent rate please i.e how do you get 3.93%?

cheers fj

YorkshireBoy

bigfreddiel wrote: »

Could you show how to convert an annual rate of 4% gross to a monthly equivalent rate please i.e how do you get 3.93%?

That's easy...I went to the LTSB website.

I'll leave the maths to the mathematicians!

EDIT: You could try transposing one of these BBA AER formulae...

http://www.bba.org.uk/policy/article/calculation-of-the-annual-equivalent-rate-aer/self-regulation/

masonic

YorkshireBoy wrote: »

EDIT: You could try transposing one of these BBA AER formulae...

http://www.bba.org.uk/policy/article/calculation-of-the-annual-equivalent-rate-aer/self-regulation/

:eek: Those are a little overcomplicated. I've never seen interest paid in anything other than annual or monthly intervals.

For annual interest, gross = AER

For monthly interest, gross = [(1+AER)^(1/12) - 1] x 12

e.g., for your 4% rate, gross = [1.04^(1/12) - 1] x 12 = 3.93%

YorkshireBoy

masonic wrote: »

I've never seen interest paid in anything other than annual or monthly intervals.

I believe my Yorkshire Bank Savings Plus account pays interest quarterly...at least it used to do.