Natwest interest rate error

RG2015

Terry_Towelling wrote: »

As a matter of interest which two days are you discounting? 28th and 29th April presumably.

No. I believe that May will be 31 days from 1st May to 31st May as per my earlier post

I have been monitoring this on a spreadsheet since I opened the account in 2016 and the interest has always been calculated up to the day before the 1st business day. There was one occasion though when they made a mistake but they corrected it within a few days.

What I do not know is how the new Ts&Cs from April are going to change this.

Terry_Towelling

Well, RG, two years monitoring has not been wasted. The current cycle for interest payments in early June will indeed be 31 days long. NWB has confirmed what it does and it bears no relation to their published information.

The interest-cycle works thus:-

The end of the calculation-cycle will be the last day of the month unless that day is Fri/Sat/Sun in which case the last day will be the next working day. The next monthly cycle starts the day after that.

I've emphasised the word 'working' because that is the only point in the process where NWB has stated it to have any relevance in the calculation cycle. So, if the last day of the month were a bk hol Monday, that would still be the end of the cycle - unless they have got that wrong too.

In other words all the guff about the cycle running from COB on 2nd last BD to COB on 2nd last BD is not correct. Because I'm not allowed to post links you can find this piece of incorrect info under Point 6 (bullet 1) of the following disabled web address:-

https: // personal.natwest/personal/savings/savings-builder.html

I don't think the new T&Cs will affect this unless they suddenly decide to do what they've published instead.

However, we do now have a top-tip. Since 03/04 no interest is paid if the balance doesn't increase by £50. So anyone not intending to increase their balance or anyone having to decrease it should in fact remove everything from the account bar the minimum operating balance and stash it in an easy access account to keep earning interest. When the next interest-cycle starts simply put it all back in again and you will automatically get 1.5% (balances up to £5K) without having to add an extra £50!

RG2015

Point 6 (bullet 1) states:

To earn interest each month, your balance must grow by at least £50. Our monthly interest cycle runs from close of business on the second-last business day of one month, to close of business on the second-last business day of the following month.

This does not mention the interest calculation period, only the day by which the balance has to have increased by £50.

I have observed that the interest calculation period runs from the 1st business day of the month until the day before the 1st business day of the following month.

To earn interest for the month of May, the balance on Wednesday 30th May must be at least £50 greater than the balance on Friday 27th April.

If the balance on 27th April was £4,950 and £50 was added on 30th May the interest earned will be £6.31 calculated as follows:

£4,950 x 1.50% x 29/365 = £5.90
plus the extra 2 days when the balance is £5,000 which is £5,000 x 1.50% x 2/365 = £0.41

PS: I am ignoring any interest earned on the interest paid on 1st May which may add one penny on a balance of approx £5,000.

You say this bears no relation to their published information but my view is that it is open to interpretation. You interpret it one way and I interpret it differently. I would also admit that my interpretation may have been influenced by observing what NatWest actually did in practice.

Terry_Towelling

I'm not sure I would ever have interpreted a sentence that starts with the words 'Our monthly interest cycle runs from...' as actually meaning 'To be eligible for interest your deposit must be made between...'. That said, when read in conjunction with the other bullet points on the NWB info page , your interpretation does begin to appear to me.


No matter, your observation of the actual practice brought you to the correct conclusion.


I wonder how other people would interpret NWBs wording. Perhaps I am the only soldier marching in step!