What decides the amount interest rate get paid on?

norm_

With TSB I believe the closing balance of the day 23:59 is what decides the the amount the interest gets paid on.

However what if you were to pay in the full qualifying balance 1 minute before the end of day, then withdraw it again a couple minutes later?

polymaff

The figure at the instant when the closing balance is logged is the balance used for the purpose of computing that day's interest.

I believe that the banks have already thought of what you have in mind - and so synchronise the timing.

norm_

polymaff wrote: »

The figure at the instant when the closing balance is logged is the balance used for the purpose of computing that day's interest.

I believe that the banks have already thought of what you have in mind - and so synchronise the timing.

No I'm not thinking of trying to dupe the system. My thought was more along the lines of how can the bank make money from the funds if they are only in the account for a few minutes in the day?

PeacefulWaters

norm_ wrote: »

No I'm not thinking of trying to dupe the system. My thought was more along the lines of how can the bank make money from the funds if they are only in the account for a few minutes in the day?

Transactions of this nature are few and far between. It's a bit like comparing a grain of sand to the Sahara Desert.

The answer, I suppose, is that they don't make money from it. But then they don't make money when you withdraw money from an ATM. Or report your card stolen. Or don't pay back your loan. Or dozens of other scenarios.

shortcrust

norm_ wrote: »

No I'm not thinking of trying to dupe the system. My thought was more along the lines of how can the bank make money from the funds if they are only in the account for a few minutes in the day?

It's drop in the ocean stuff that all balances out because no one does what you've described on a systematic basis. There's no advantage to it. It obviously happens, but by chance rather than design, for example when people money about to qualify for special rates/rewards etc. But as people move money from Bank A to Bank B others are moving from Bank B to Bank A. Some money gets moved out at 23:58 after being in an account all day, and money gets be moved in at 23:59 after being somewhere else. It all works out much the same.

YorkshireBoy

polymaff wrote: »

I believe that the banks have already thought of what you have in mind - and so synchronise the timing.

If you're suggesting all banks' cut-off times for calculating interest are synchronised, they're not.

Some people exploit this and are 'doubling up' on their interest by spending a few minutes shuffling money around on an evening.

Occasionally they get caught out though and have their accounts closed!

polymaff

YorkshireBoy wrote: »

If you're suggesting all banks' cut-off times for calculating interest are synchronised, they're not.

Some people exploit this and are 'doubling up' on their interest by spending a few minutes shuffling money around on an evening.

Occasionally they get caught out though and have their accounts closed!

My understanding was that the banks have co-ordinated to stop this happening.

Or, more to the point, to restrict the practice to the banks themselves.

colsten

norm_ wrote: »

However what if you were to pay in the full qualifying balance 1 minute before the end of day, then withdraw it again a couple minutes later?

You could probably benefit more from sleeping at 23:58 every night.

brendon

It doesn't really matter, because you withdrawing the money is pretty much an illusion. Even though we have faster payments, etc, balances are only really settled at the end of day. And it is these values that ultimately get declared on the bank's balance sheet, so withdrawing your money at 00:01 doesn't really affect the bank at all.