Loss of interest on weekend for Club Lloyds & TSB Classic Plus?

info_addict

Just been trying to work out my future interest payments on my maxed out above accounts for the next coming months. As I will be away with no internet access and wish to set up transfers to cream off the interest.

I'm aware the conditions state

For each month that you meet the 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 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.

Got a bit stuck in trying to calculate May's interest, as April's interest ends on May 1st. But the second working day of May is the 5th (4th= bank holiday).

Rang Lloyds, who after a bit of head scratching confirmed that in effect no interest is paid for May 2nd, 3rd or 4th.

Just thought I'd try and see if this is indeed correct and that in May - June only 28 days count for interest?

Archi_Bald

info_addict wrote: »

Rang Lloyds, who after a bit of head scratching confirmed that in effect no interest is paid for May 2nd, 3rd or 4th.

This is nonsense. Interest gets paid for every day of the year, provided that 2 DDs have been paid out in the month preceding the interest payment date.

bsms1147

I see what you're saying; Lloyds have advised you incorrectly (interest is paid on every day of the year), but their T&Cs do lead to that interesting conclusion.

You could argue that it would be better for them to say that each period runs;
- from the second working day of a month to the day before the second working day of the next month, or
- from the day after the first working day of a month to the first working day of the next month

Feb - 28 days - £12.06
Mar - 30 days - £12.92
Apr - 30 days - £12.92 (though the T&Cs mean it could also be 33 days - £14.21)
May - 31 days - £13.35 (though the T&Cs mean it could also be 28 days - £12.06)

The same situation arose in the December billing period, and based on that it looks like Lloyds are using the second of the two definitions above (so you'll get £12.92 and £13.35 for April and May respectively).

eskbanker

info_addict wrote: »

Rang Lloyds, who after a bit of head scratching confirmed that in effect no interest is paid for May 2nd, 3rd or 4th.

Stop and think about it - on average the first working day of every seventh month will be a Friday, with a two-day gap before the second working day. Factoring in bank holidays sometimes being on early Mondays and that would mean that the long-term average would be something like four days a year without interest if the above were true, which would then prevent achievement of published annual interest rates, etc - it's not going to happen!

Having said that, I remember a debate with my mortgage provider many years ago about how they'd charged 366/365ths of the stated APR in a leap year, in my young and naive innocence I think they got the better of me back then....

TheTracker

For my Standing Order Scoopers I simply set up a monthly transfer of Max Balance x Net Interest Rate / 12, not bothering with the exact amount each month. I actually have an account dedicated to receive all the interest transfers and forward the aggregate to my current account in order to smooth the noise.

info_addict

Thanks everyone.

I kind of knew the Lloyds weren't correct, but the T&C aren't very clear on what happens on these kind of dates.

I'll work on the number of days as bsms1147 post #3 says.