Simple Interest Calculation on Credit Card PPI

Gunwoody

Hi all,
I'm trying with little success to find an actual example of an 8% simple interest calculation for a rolling credit account (credit card). Now I understand the the difference between simple interest and compound but what i'm not sure of is this;
After the credit card account is reconstructed to remove PPI, if the notional (reconstructed balance) is positive then 8% compensatory interest is due - correct?
So if for example, the following months each have a respective notional balance after PPI, card interest on the PPI etc has been removed. BTW This is purely example data.
April  2010 Reconstructed balance £7.84 
May 2010 Reconstructed balance £34.78
June 2010 Reconstructed balance £62.13
So, in each case the balance is positive and 8% interest is due up to the account closure in August 2019 - but how is it calculated?
Is it 8% on that month's balance? So for April it would be £7.84 x 8% = 0.6272p divided by 12 months - so approx 5p and then a similar calculation for the next months balance and so on.....
Or is it £7.84 @ 8% for 9 years and 4 months which comes to £5.86 and so on...£25.76, £45.59.....
Any help gratefully received,
Many thanks
Mike

[Deleted User]

No.

The 8% is statutory interest that is paid on the PPI redress.

It has nothing to do with the monthly balance.

Gunwoody

Hi ZX81, sorry but thats not correct. When the PPI charged throughout the life of your account is removed, if it leaves a positive balance (also known as a notional balance) then 8% is paid. 

Gunwoody

Unfortunately the FOS don't give an actual example calculation but this is what they say - what's your interpretation?

From the FOS Website

• A hypothetical reconstruction of the credit card account to find out what the current balance of the credit card account would be if the consumer had paid the same monthly payments, but the PPI policy had not been added to it. This will involve the business removing the PPI premiums, any interest that was charged on the premiums and any charges (and interest on those charges) that would not have applied if the PPI had not been added to the account. The business should then pay the consumer the difference between the current balance and what the current balance would have been without PPI.
• The addition of interest (usually at our normal rate of 8% per year simple) on any credit balance for any periods when the reconstructed account would have been in credit. In some cases we may decide to tell the business to pay compensation for any distress or inconvenience caused to the consumer.

JimmyTheWig

Surely it's going to be a daily calculation.
So on, say, 15th April 2010 they owed you £7.84. On, say, 21st April you spent £10 in Tesco. They no longer owed you money.
So you're due 7.84 x 8% x 6/365 for those six days. I make that about a penny.

Then the same calculation for each month.

Gunwoody

Hi Jimmy,
Thanks for your reply. I'm not sure I follow your thinking. There wouldn't be any spend at Tescos as this is historical data.
Thanks

Gunwoody

Anyone else got any thoughts?

[Deleted User]

If you have no evidence to challenge any figures provided, some online calculator or forum post won't make a jot of difference. Whatever you get, assuming the complaint is upheld, is what you get, only evidence that fills in missing pieces of the history will change anything