Lloyds Vantage Interest Calc

mgarl10024

Hi all,

I had a Lloyds Vantage Account that was paying 4%, and despite being able to work out the interest for many other accounts I have to the penny, I could never fathom out theirs.

Since October, the rate has dropped to 3% on £5000 only - so I thought that it would be a doddle - but I just can't make it add up.

When I phoned back last year, I was told that the interest for a month would be paid at the beginning of the next month.

So, November has 30 days. The rate isn't really 3%, it is 2.96% gross. So November's interest minus tax should be £5000*0.0296*(30/365)*0.8 = £9.73.
Except, £10.28 was paid. :mad:

Surely there must be other geeks out there who work theirs out - how are you doing it?!

skitskut

Mine has always been what I expected (sometimes a penny more) but this month I received £10.28 too but was expecting £10.06. Because the interest wasn't paid until 3rd Dec, as the 1st was a Sun, the period was for 31 days. I can only think it's something to do with the transition from 4% to 3%? Will have to see what happens this month.

YorkshireBoy

There were 32 days in the Lloyds 'billing month', so...


£5,000 x 0.0296 / 365 x 32 x 0.8 = £10.38 (so I'm not sure why you got £10.28, ie 10p less than me).


That said, I had an identical £5K in my BoS Vantage accounts and received £10.06 on each, leading me to believe they had only 31 days in their 'billing period...strange, since I'd have thought they'd use the same systems?




* For their calculation method see your T&Cs.

blinko

buddy I hate to say this but it is 50p this exercise was probably not worth the time you have spent investigating and calculating!

Archi_Bald

mine was £10.28 in Lloyds and £10.06 in each of BoS and TSB

guitarman001

I got something like £9.80 Anyway..

Milarky

mgarl10024 wrote: »

So, November has 30 days. The rate isn't really 3%, it is 2.96% gross. So November's interest minus tax should be £5000*0.0296*(30/365)*0.8 = £9.73.
Except, £10.28 was paid. :mad:

Surely there must be other geeks out there who work theirs out - how are you doing it?!

It wasn't 30 days in November, but 31 (use the dates when interest is credited, 1st Nov and 2nd Dec, and take their difference). Daily gross interest is then £148/365 per day (pro rata to £5k maximum). That gives £12.57*0.8 = £10.06.

There was a small difference of £0.27 gross : £0.22 net paid on the 3 ex 4% accounts this month compared with my one 3% account. The latter paid exactly 31 days worth: £12.57.

So it just looks to me as if the £0.27 discrepancy is something to do with the end date for the 4% promotion and things will work out properly in future if you just remember to carefully note the date-difference rather than go by the days in a calendar month.

typistretired

I received £10.06 for all my Lloyds, Bos and TBS accounts. I presume those posters who received more from Lloyds had just had their interest rate reduced from 4% to 3%.

Sphinx

These savings accounts are excellent. I have 3 accounts open, so I get £10.06 each account per month. It's a two second job quickly transferring £1k into each. Remember the monthly saver which is also 3% Gross when putting in £250 per month.

G_M

Sphinx wrote: »

These savings accounts are excellent. I have 3 accounts open, so I get £10.06 each account per month. It's a two second job quickly transferring £1k into each. Remember the monthly saver which is also 3% Gross when putting in £250 per month.

and this is relevant for people who all clearly have the accounts already, and are concerned with the interest calculation, because.....?

mgarl10024

Hi all,

Thanks for your very helpful replies. I think I am finally getting to the bottom of it.

Firstly, the "monthly billing period" had completely passed me by. When I originally read the t's&c's many months ago I think I must have understood that to be for billing for overdrafts etc. and since I wasn't going to be using them, I must not have connecting it to the periods when interest was being paid.
Having gone back through 2012's statements with the new dates it all adds up almost perfectly.

Well, when I say perfectly, there was one complication. Namely that one month I required some money so the balance dropped from ~£6000 to ~£2000 and so changed rates (from 4% to 2%). However, at the end of the month, it appears that Lloyds paid the interest for all of it at the 4% rate (so 50p too much) then clawed it back in the next month (interest is short by 50p). No wonder I was baffled when using the wrong dates on top!

Finally, as to the mystery of the £10.28, I've got a half-formed theory which the maths seems to work for.

A monthly billing period runs from "the second working day of a month to the first working day of the next month"
http://www.lloydsbank.com/legal/current-accounts/vantage.asp, making it from 4th Nov to the 2nd Dec.
But, to complicate things, 2nd and 3rd of November are Saturday and Sunday respectively and fall between billing periods (I'm not sure to which period they belong).
You still need to account for these days however. Looking at previous months, they tend to get added to the beginning of the new period, so the period becomes 2nd Nov - 2nd Dec, making it 31 days not 32 as YorkshireBoy said.

However, the 4% deal should have run out on the 31st October. But it appears that it instead ran to the end of the old period (1st Nov) and then also included these 2 extra days.

So,
2nd and 3rd Nov:
£5,000 x 0.0392 / 365 x 2 x 0.8 = £0.86
and
4th Nov to 2nd Dec
£5000 * 0.0296 / 365 * 29 * 0.8 = £9.41
Totalled = £10.27 (assuming 1p out for rounding).

Based on this, with a constant balance of ~£5000, and a billing period of 3rd Dec -> 2nd January, I will be hoping for £10.05 on the 3rd January. *fingers crossed*

Thanks again for all of your help,

MG

P.S. Blinko and G_M - it's only a waste of time if the only thing you get out of it is money. I enjoy working it out and learn new things from it - so I'm happy and getting more than 50p.