A&L DirectSaver underpaying interest?

coincounter · 3 January 2008 at 11:58AM

Firstly, I know it is sad, but I have to admit that I have an excel spreadsheet of my savings which calculates the interest that is being earned. When A&L changed their rate on the DirectSaver account last August to 6.3% AER I worked out that this equated to 6.13% gross per month, and for that month my calculation of the interest was ok. However, for September until December, the amount of interest I was getting did not match. I had to change the interest rate to 6.113% to get it to match. Have A&L made this mistake with all the DirectSaver accounts or just mine? I know it is not a big difference, but a big bank like A&L ought to get it right. The same spreadsheet for my ICICI account has been correct to the penny, so I think my calculations are ok. If you have a DirectSaver account could you check if they got your interest calculations right? Cheers!

RayWolfe · 3 January 2008 at 2:21PM

You are of course aware that monthly interest will vary depending on the number of days in the month.

coincounter · 3 January 2008 at 3:00PM

Yes, thanks. I was aware of this, and have a column of my spreadsheet showing the number of days in the month. I use this to multiply the gross interest rate divided by 365, and then apply this percentage to my savings to find out the quantity of interest.

However, I've just been back to check my spreadsheet and found that I had altered the August entry so that the interest rate was being divided by 366 days instead of 365 (when I was playing around to see why there was a difference between what they were paying and what I was expecting). When I changed this back to 365 I found that the interest I got exactly matched the 6.113% rate, so they have been underpaying since August by my calculations.

I'd ring A&L to complain, but the cost of the 0870 phone call would outwiegh the refund! It is more interesting to find out if they are ripping off all DirectSavers on a global scale first...

coincounter · 3 January 2008 at 3:37PM

I think I might have answered my own question - 6.113 is 365/366ths of 6.13.

I had thought that A&L had made a mistake and entered 6.13 incorrectly as 6.113 in their interest calculation program, but it seems more likely that they assume all years are leap years.

So there is still the question - am I the only one or have they done this to other DirectSavers? Or other account holders? Do other banks do this? ( I know ICICI don't as their calculations matched mine). Is it illegal/immoral to assume there are 366 days in the year when it isn't actually a leap year?