How is interest calculated by banks?

NFH

Mikeyorks wrote: »

My guess is that you are wrong. As you have been previously on both SO and BACS Direct Credit threads.

Discuss other threads within those other threads, not here. In any case, I proved my point correctly in both.

If you think I'm wrong, please explain why. You have given no reasoning or explanation.

Mikeyorks wrote: »

Now back to your assertion that :

???

By "occurring", I am referring to the value date, as that is what is relevant to this thread, i.e. interest accrual.

Milarky

NFH wrote: »

Yes, Barclays for example shows the value date as being Monday 23rd. If you're seeing Saturday 21st as the date, then your bank is not showing you the value date (which is how interest and charges are calculated), but the booking date (mostly irrelevant except for audit purposes).

How do you know what use an individual bank makes of a 'non-working day' date of a payment or receipt? It simply varies from bank to bank in reality and there is no agreement between them all on how to process dated payments now that weekend receipts are a reality. If banks were to all operate on a standard basis that would be like the second coming - or the final phasing out of cheques.

Mikeyorks

NFH wrote: »

My guess is that your bank is erroneously showing the booking date instead of the value date. The booking date is the date that the transaction is registered on the account, whereas the value date is the date that the transaction takes effect, primarily for interest accrual purposes. .

No - they're showing the value date. And they do so consistently whether the transaction is a weekend / Bank holiday or Monday to Friday. Based on your logic (?) they would vary accordingly. I think not.

The specification of the data files define the value date :

Date/time at which cash becomes available to the account owner (in a credit entry), or ceases to be available to the account owner (in a debit entry).

Having nothing better to do on one occasion I checked the maturity interest paid on a 12% Regular Saver the Halifax were running a couple of years ago. The payments were via SO - but being internal - several credited on weekend dates. The interest was to within a few pence ..... and confirmed useage of the dates shown on the weekend credits.

NFH

Milarky wrote: »

now that weekend receipts are a reality. If banks were to all operate on a standard basis that would be like the second coming

From the comments given so far, it seems that value dates on non-working days are used by some banks but only for internal transactions between accounts of the same bank. I believe that the standard for all interbank transactions is that value dates fall on banking days only.

Milarky wrote: »

or the final phasing out of cheques.

That couldn't come too soon!

opinions4u

Mikeyorks wrote: »

Having nothing better to do on one occasion I checked the maturity interest paid on a 12% Regular Saver the Halifax were running a couple of years ago. The payments were via SO - but being internal - several credited on weekend dates. The interest was to within a few pence ..... and confirmed useage of the dates shown on the weekend credits.

Halifax and BoS paid interest from the day the deposit was received, regardless of the day of the week it was received.

Now they don't. If funds are received on a Saturday, Sunday or Bank Holiday they are credited on that day, but interest accrual is deferred until the next working day.

NFH

opinions4u wrote: »

If funds are received on a Saturday, Sunday or Bank Holiday they are credited on that day, but interest accrual is deferred until the next working day.

In that case, the booking date can fall on a non-business day, but the value date has to be a business day. Interest accrual is based on the value date.

new2012

If I did decide to open another reward account to get my £5 every month I would transfer the £1000 at noon on the last day of the month, but not if it occurred on a holiday, such as Christmas or new year, or a bank holiday or if it occurred at the weekend.

At least I now know not transfer the money at around 9.59pm on a Friday.

I would think around noon would be ideal?

All these replies for what I thought was a simple question.

opinions4u

NFH wrote: »

In that case, the booking date can fall on a non-business day, but the value date has to be a business day. Interest accrual is based on the value date.

But it ia absolutely the choice of the bank as to whether or not to make this the case.

Halifax only changed because they merged with Lloyds TSB. Prior to that they chose an alternative approach.

It's not a one size fits all situation.