Does Chip know how to calculate interest?

liamcov

I've had some form of their account before and I've had to tell them twice that the interest they paid me was incorrect - they sort it out in the end but it doesn't provide me with much confidence in them.

I've recently got the Chip+ account, 1.25% interest on £2,000. They pay interest every 3 months and my first 'bonus' payment for March is showing as less than £1 (my calculation it should be around £6), will this change closer to the time or will I have to chase them about this too?

mrkds

I think the number they are giving is the interest accrued up to that point, not for the whole 3 months. I think it's worked out on a weekly basis. 
As you could withdraw money whenever you want so they would have no way of knowing what your actual interest earnings will be in advance. 

DireEmblem

I think you have to hold the balance there for each 12 week period or whatever it is.  Totally confusing way of doing it, but that matches their product fee structure.

mrkds

DireEmblem said:

I think you have to hold the balance there for each 12 week period or whatever it is.  Totally confusing way of doing it, but that matches their product fee structure.

Where did you read that? I  Ithought the account was 'easy-access' in the sense there is no penalty for withdrawing money whenever you want. 

VXman

It's not interest. It's a 1.25% bonus. The way I understood it was you had to keep £2000 in for 12 weeks to get 1.25% bonus (or 25% of that?)  Anyway - confusing and the reason I got rid of my account.

mrkds

I understand it's technically a bonus, but I thought you accrue the bonus in the same way you do interest in standard savings account (except it doesn't compound).

 If you are correct then what happens if you make a withdrawl before the 3 month is up? Do you just earn on what ever is left there from the initial deposit? And if you make an additional deposit during the 3 months, do you not earn interest on that? Or does the 3 month clock get reset?

I think a link to T&C's will help as I'm pretty confused now. 

Ed-1

mrkds said:

I understand it's technically a bonus, but I thought you accrue the bonus in the same way you do interest in standard savings account (except it doesn't compound).

 If you are correct then what happens if you make a withdrawl before the 3 month is up? Do you just earn on what ever is left there from the initial deposit? And if you make an additional deposit during the 3 months, do you not earn interest on that? Or does the 3 month clock get reset?

I think a link to T&C's will help as I'm pretty confused now. 

The bonus is calculated weekly on a Tuesday. I assume that means you get 1.25%/52 based on whatever the balance is on a Tuesday (unlike normal interest bearing accounts which calculate daily).

mrkds

From the FAQ:

https://global-uploads.webflow.com/5d65390243727621f8413d93/5fa94cf9a88b4b8259a5979c_Chip+1 FAQ_.pdf

This is pretty much what I thought was the case. 

Your  bonus  is  calculated  weekly  every  Tuesday  and  will  be  added  to  your  Chip+1  balance every  12  weeks. If  you  delete  your account before the 12 week window has ended, you lose any bonus accrued within  those 12 weeks. However, if we end the bonus, we will pay any bonus due up to the end of the notice period. While  your  bonus  is  calculated  every  week,  we  only  display  the  cash  amount  earned  in whole  pennies. We calculate  your  weekly  bonus  amount  by  timesing  your  balance*  by  the  rate  (1.25%) and  dividing  that  by  52. *We  don’t  include  any  money  you’ve  already  accrued  as  bonus  in  this  calculation,  see ‘does  the  bonus  compound?’  above.

eskbanker

We calculate your weekly bonus amount by timesing your balance* by the rate (1.25%) and dividing that by 52.

I know some organisations take great delight in using plain English rather than jargon and legalese, but personally I'll skip straight past any institution using 'times' as a verb in that infantile way!