Barclayard interest calculation

Yakkity

Hi,

I queried the interest charged on a recent statement and afte 3 calls and 2 hrs on the phone they admitted the amount was wrong (yet couldn't explain why) here:



This has prompted me to go back over other statements. Am I missing something here, because I can't see how they arrive at the 'estimated interest' figures at all. Any insight would be most appreciated! Here are the estimated interest bits from some other statements:

Yakkity

Sorry for the typo on the thread title!

MorningcoffeeIV

Interest in calculated daily, so you need to work it on your daily balance, not a top line statement figure.

The interest will almost certainly be correct, despite what you've been told.

Yakkity

Yes, but that would still mean that the interest calculated for that statement period shouldn't be greater than the opening balance. Take the original (March 2023). Opening balance £3699.89. £699.89 paid a week later. The statement shows interest was calculated as 0.84% based on opening balance as at 21st Feb (which reduced to £3000 on 28 Feb). How did they arrive at £50.91? Customer Services couldnt explain - even after spending an hour with support from a colleague.

CliveOfIndia

As above.  If you do not repay the statement in full then each transaction will attract interest each day until it's repaid.  So you need to convert the annual rate to a daily rate, then apply that to each individual transaction from the date that the transaction was statemented.

Yakkity

Ok, have created a sheet with daily compound interest. Note the opening balance for March and the only transaction was a repayment of £699.89.

Does this look right?

grumbler

Yakkity said:

Ok, have created a sheet with daily compound interest. Note the opening balance for March and the only transaction was a repayment of £699.89.

Does this look right?

No purchases?

And why the 'transaction' on the 28th had no effect on the running balance?

Yakkity

Yes. no purchases.
The transaction was a repayment of £699.98 - the running balance reduced accordingly.

grumbler

Yes, I see.

And yes, £50sh interest looks bigger than expected.

What happened in Jan?

Let's say the balance is £0 on the 20th of Jan. Then you spend your £3.7K on the 21st.

In the Feb statement there is no any interest added as it's waived if you pay the balance in full before the due date. If you don't, then this interest is added to the Mar statement - for two months (Jan-Feb and Feb-Mar). And this would be about £50 that we see in the Mar statement.

Yakkity

Interesting.. I'll try and summarise here:

Jan statement - opening balance £4208. New purchases : £5209. Payments : £5060. Closing balance £4357. £0 interest charged.
Feb statement - opening balance £4357. New purchases : £6342. Payments : £7000. Closing balance £3699.89. £0 interest charged.
Mar statement - opening balance £3699. New purchases : £0. Payments : £699. Closing balance £3050. £50 interest.

grumbler

Yakkity said:

Jan statement - opening balance £4208. New purchases : £5209. Payments : £5060. Closing balance £4357. £0 interest charged.

Not sure why £0, but if it wasn't a promotional balance and as it wasn't paid it in full, the interest will be added to the next statement.

You can extrapolate your spreadsheet one month back and calculate it.