Daily Compound interest

diamond_dave

Desperate for help again - My fil is self funding his care home fees but has almost run out of savings.The council's Deferred Payment agreement says that the interest rate will be 1.5% compounded daily. Can anyone work out the cost per month/year if the fees are £850.00 each week,please. If I'm right this could be a lot of interest. Any advice would be Very useful.Thanks.

Nearlyold

The interest charge at the end of the first year will be approx. £331.50 making the total debt at that point £44531.5

12 months later the total debt from the first year's payments will be £45199.47 (ie £44351.5 + annual interest of 1.5%) plus the debt now owing from the second year's payments of £44531.5. 

Of course, on any statement the council might provide they simply lump all the years in together to give just one figure owing

The 1.5% is the annual rate of interest not the daily rate, the daily rate charged (which is not mentioned) is equivalent to an annual rate of 1.5% and would be in the region of 0.004%

diamond_dave

Brilliant, Nearlyold. What a star! Trust me to get the annual rate confused with the daily rate.I did think that the interest would be horrendous if it was the daily rate of 1.5%.
Once again, thank you for your help.

Exodi

Nearlyold said:

The 1.5% is the annual rate of interest not the daily rate, the daily rate charged (which is not mentioned) is equivalent to an annual rate of 1.5% and would be in the region of 0.004%

100% this.

A daily 1.5% interest rate would be absolutely insane. Just a single £100 bills turns into over £23,000 in one year, and five and a quarter million after two  I know care homes are expensive and all that...

diamond_dave

Exodi - I thought it might be expensive! Many thanks all.