ISA interest calculation help?

skamen1

Hello

I recently decided to close an ISA due to a drop in interest rates and switch the funds to premium bonds - having won £800 over the past year :-)

As the interest wasn't due to be paid until September, I was advised by Nationwide that they would calculate the interest on closure and transfer the money into my current account.

So far so good - but they have arrived at a figure I don't agree with, and on querying them - their Account Corrections team have said they can only let me know how they calculated my interest if I can show them my own calculation as to what I think it should be!

Not being a mathematician I have no clue how to calculate compound daily interest for an account which had 3 different rates since May 2016.

Sum at closure was 15747.30
They have paid me £78 interest! This seems wrong to me

Does anyone have any suggestions how I can work this out?

Rates were
4 May 2016 -1 Sep 2016 - 1.3%
1 Sep 2016 - 28 Feb 2017 - 1.05%
1 Mar 2017 - 1 Apr 2017 - 0.75%

Any help gratefully received
Many thanks

eskbanker

skamen1 wrote: »

As the interest wasn't due to be paid until September

This implies that you received interest last September so you obviously won't be due a full year's interest on closure if closing in March or April, not much more than halfway through the interest year, so £78 sounds about right to me for half a year's interest on £15.7K at circa 1% on average.

skamen1

Thanks eskbanker...
The main problem has really been their unhelpful attitude and refusal to explain how they arrived at that figure. With my account now closed on the online portal I am unable to see dates/transactions/interest payments etc
They are sending me a paper statement so I will see if I can figure it out from there.
Have always found their Customer Services to be very helpful in the past so this has been a bit of a surprise

Lokolo

So you think they calculated it wrong even though you yourself don't have a clue how to calculate?

How on earth did you come up with the conclusion that their amount is wrong??

skamen1

Thanks for your response Lokolo - no need to be rude is there?

My basic calculation was that 1% of £15747 is £157 therefore assumed that £78 was not enough and their team would not explain otherwise

Lokolo

skamen1 wrote: »

Thanks for your response Lokolo - no need to be rude is there?

My basic calculation was that 1% of £15747 is £157 therefore assumed that £78 was not enough and their team would not explain otherwise

Yes and you would get £157 in there if the money is in there the whole year. September to September (this is your annual interest date). You have had it in there September to April.

Imagine you have a job where you earn £20,000 per annum. And you work there for 6 months. Should you get the whole £20,000? No, you would get it pro-rata, so £10,000. The same applies to interest.

£15600 would earn £81 from 1st Sept to 1st March (180 days worth of 1.05%) and then £10 from 1st March to 1st April (31 days worth of 0.75%) based on the information you've given.

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Edit. I have no problem helping people out, but you can't go around accusing people of being wrong when you don't even know yourself. I am happy you asked as you now may understand for the future.

skamen1

I'm not going "around accusing people" of anything, just said it seemed wrong to me. The bank were not forthcoming in providing an explanation of how they arrived at that figure - but asking me to provide them with my own calculations.

Hence my question here as to how to do that calculation.

Thanks for your patronising explanation. For the future I will certainly know NOT to ask a question on this forum again if that's the kind of attitude I'll encounter.

Lokolo

skamen1 wrote: »

I'm not going "around accusing people" of anything, just said it seemed wrong to me. The bank were not forthcoming in providing an explanation of how they arrived at that figure - but asking me to provide them with my own calculations.

Hence my question here as to how to do that calculation.

Thanks for your patronising explanation. For the future I will certainly know NOT to ask a question on this forum again if that's the kind of attitude I'll encounter.

Well apologies if you thought my explanation was patronising, it wasn't meant to be. I hope it helps you in the future.