Bank Interest calculation

opinions4u

At the end of the day there is no sharkish profiteering going on here. I can't see that the bank is exploiting customers or hiding the rates payable.

They just use the number of actual days in a year to calculate the interest.

SnowMan

[quote=[Deleted User];61844719]No - ignoring the 0.25 is not wrong; in this context. Our calendars are based on 365 days. The leap year is purely an astronomical correction - and irrelevant for accounting purposes[/QUOTE]

What a truly magnificent post that is:rotfl::rotfl::rotfl:

socrates

innovate wrote: »

It all depends on the T&Cs of the account. If the T&Cs say they calculate interest annually (calendar year), it seems they have calculated it correctly. If the T&Cs say any different, the different rules apply.

What are the T&Cs of the account? Can you post a link to them?

As an aside: you have been saving if you had your money in a bank account that paid interest. Investing is very different - you would have bought shares, funds, trust or bonds, none of which pay interest.

Hi

Am trying to PM you but your inbox is full - its just a quick question

Sorry to hijack the thread

[Deleted User]

SnowMan wrote: »

What a truly magnificent post that is:rotfl::rotfl::rotfl:

Are you being genuine or have you succomed to sarcasm?

SnowMan

[quote=[Deleted User];61844831]Are you being genuine or have you succomed to sarcasm?[/QUOTE]

Not sarcasm, I genuinely found it an interesting argument and very funny ( I can't explain why) and nearly fell off my chair laughing. As Edward de Bono would say 'it is more important to be interesting than to be right' , a thought I wholeheartedly agree with.

Clearly we are a different view on this one but that is what the forum is about expressing different views to aid each others understanding. But there is no requirement for everyone to converge to a single view.

Ark_Welder

[QUOTE=innovate;61844011As_an_aside:_you_have_been_saving if you had your money in a bank account that paid interest. Investing is very different - you would have bought shares, funds, trust or bonds, none of which pay interest.[/QUOTE]

Bonds pay interest, as do bond funds.

[Deleted User]

SnowMan wrote: »

Not sarcasm, I genuinely found it an interesting argument and very funny and nearly fell off my chair laughing.

Clearly we are a different view on this one but that is what the forum is about expressing different views to aid each others understanding. But there is no requirement for everyone to converge to a single view.

Thanks for your reply. Not being able to see each other in person makes it difficult to read facial expressions, tone of voice, etc and this makes it difficult to understand inherent meanings in comments. But I'm glad you found it amusing.

Nevertheless, your point about the 0.25 has no significance in this context (my opinion- sorry if you don't agree). I think savings interest should be calculated on the number of days the money had been with the bank. I have not gained anything from the fact that 2012 had an extra day, so I fail to see a reason for me to be compromised.

rb10

innovate wrote: »

It all depends on the T&Cs of the account. If the T&Cs say they calculate interest annually (calendar year), it seems they have calculated it correctly. If the T&Cs say any different, the different rules apply.

What are the T&Cs of the account? Can you post a link to them?

Sorry innovate but unusually, I am going to have to disagree with you. T&Cs don't tend to go into the detail of how interest is calculated, as it's a standard calculation that doesn't vary much between banks.

The BBA code of conduct for the advertising of interest bearing accounts states that:

"interest is calculated by taking the balance multiplied by the annual interest rate divided by 100, multiplied by the number of calendar days that the balance is held, divided by 365 in a normal year or 366 in a leap year"

Since 2012 is a leap year, they were quite correct to divide by 366 during 2012.

opinions4u

rb10 wrote: »

Sorry innovate but unusually, I am going to have to disagree with you. T&Cs don't tend to go into the detail of how interest is calculated, as it's a standard calculation that doesn't vary much between banks.

The BBA code of conduct for the advertising of interest bearing accounts states that:

"interest is calculated by taking the balance multiplied by the annual interest rate divided by 100, multiplied by the number of calendar days that the balance is held, divided by 365 in a normal year or 366 in a leap year"

Since 2012 is a leap year, they were quite correct to divide by 366 during 2012.

I really should have known that. Not just had a gut feel for it!

YorkshireBoy

rb10 wrote: »

Sorry innovate but unusually, I am going to have to disagree with you. T&Cs don't tend to go into the detail of how interest is calculated, as it's a standard calculation that doesn't vary much between banks.

The BBA code of conduct for the advertising of interest bearing accounts states that:

"interest is calculated by taking the balance multiplied by the annual interest rate divided by 100, multiplied by the number of calendar days that the balance is held, divided by 365 in a normal year or 366 in a leap year"

Section 8 seems to give them the option of using either 365 or 366 days in a leap year...not always 366 as your quote (which I can't seem to find an exact match for?) seems to state.

They do go on to say "if making an adjustment for AER purposes the divisor should be 365 in all cases".