HELP:Calculating Interest

loobiloo

Meltdown wrote: »

If the money went in on the 13th, it wasn't in the account for the full month.
The earlier posters were misled. They asked questions about whether the money was in the account for a "whole month" or a "complete month". You led them to believe (by your responses) that the money was in there on the 1st March. It was on that basis that they did their calculations. One assumes that the terminology being used was new to you, and you didn't realise what precisely was being asked. It would perhaps be useful for the respondents to frame similar questions (in future) in a different way, i.e. "What day did the money go into the account, and was this in the form of cash, cheque, or BACS transfer?"

My apologies! The money was in there for 31 days - I assumed that meant a month. I didnt realise the Kaupthing only paid their interest on the last day of the calender month.

Meltdown_2

Ah, the joys of the English language ...

I admit to being more than a little perplexed (at first) by your latest posting, loobiloo, but on reflection I am guessing that you mean the money has been in there from the 13th March, today is the 24th April, so that's at least 31 days - which of course it is.
Many (most?) monthly-interest accounts operate on calendar months. But I can now see that not everyone expects that to be the case.

I think you took my earlier post a bit too harshly. Experienced posters (as the respondents all are) are no doubt used to a communication problem every now and again. I was simply flagging-up why they gave you the answers they did - so you don't lose trust in the valuable advice being given here.

sloughflint

I confess I didn't think about the end of the calendar month aspect. My monthly payment is on the ( monthly) anniversary of account opening hence the response.

loobiloo

Meltdown wrote: »

Ah, the joys of the English language ...

I admit to being more than a little perplexed (at first) by your latest posting, loobiloo, but on reflection I am guessing that you mean the money has been in there from the 13th March, today is the 24th April, so that's at least 31 days - which of course it is.
Many (most?) monthly-interest accounts operate on calendar months. But I can now see that not everyone expects that to be the case.

I think you took my earlier post a bit too harshly. Experienced posters (as the respondents all are) are no doubt used to a communication problem every now and again. I was simply flagging-up why they gave you the answers they did - so you don't lose trust in the valuable advice being given here.

Thanks for explaining meltdown; this is indeed a good place to receive valuable advice.

However, I also have an account with ICICI and the interest is paid each month, on the anniversary of the first payment being received (as sloughflint says) which makes far more sense to me. Its logical and fair that way, I believe

sloughflint

loobiloo wrote: »

Its logical and fair that way, I believe

It's fair either way loobiloo because interest is calculated daily on the balance so whenever the account is eventually closed, the interest will be paid up to that final date.
Until then, it doesn't really matter which date they choose to pay the interest each month.

loobiloo

sloughflint wrote: »

It's fair either way loobiloo because interest is calculated daily on the balance so whenever the account is eventually closed, the interest will be paid up to that final date.
Until then, it doesn't really matter which date they choose to pay the interest each month.

Thanks sloughtflint, and thanks too for everyone else for all your help. The internet can be so fab and helpful at times!

YorkshireBoy

loobiloo wrote: »

I didnt realise the Kaupthing only paid their interest on the last day of the calender month.

According to your T&C's they don't. The default is the day of the month that your account was opened, although it's possible to change this to a day of your choosing (you perhaps did?). See definition 'q)' on page 5 of your account T&C's.

http://www.kaupthingedge.co.uk/Includes/PDF/tandcs.pdf

easymoney1964

My first visit & post.
This forum site is great, you all give good advise.
I'm interested in the calculation of interest and have read very carefully.
1 thing that would be useful to me & maybe others would be an excel speadsheet, with all the calculation in place, so you could enter the amount to invest,% rate, & all the details of interest would appear month by mouth.

Maybe there already is 1 ?.
Keep up the good work, i'll be back.

euCris

Hi ColxFile,

I am new to this forum and also new to the financial terminology and maths :-(
I was wondering if you could expanda bit on the following sentence

"For £250 a month, at an annual rate of 10% (Approx 9.57% AER) for 12 months:"

As I can't figure out how to landed on the Approx 9.57 AER. How did you calculate this approximate AER from the 10% rate?

Thanks in advance,

euCris

Hi,

I am new to this forum and I am really struggling to understand where CoxFile came to the following conclusion.

"For £250 a month, at an annual rate of 10% (Approx 9.57% AER) for 12 months:"

Would anyone be able to explain to me how did he came up with the 9.57% AER please?

Thanks in advance,