Help Required With HiSAVE Interest Calculation

DocProc

At the beginning of January 2008, my HiSAVE account balance was £7,922.66

The interest credits and tax debits I received were as follows:-

Interest Credit on 31/01/08: £17.63
Tax Debit on 31/01/08: £3.52
Interest Credit on 04/02/08: £5.39
Tax Debit on 04/02/08: £1.08

Total Interest Credited for January: £23.02
Total Tax Debited for January: £4.60

I think the interest I have received, even after the correction credit and debit done on the 4th February, is still incorrect. However, despite sending three e-mails to the HiSAVE Account Manager, in which included my own interest calculations, I could not get them to agree with me that the total interest has still been underpaid. I suppose the next thing will be to get on the phone to someone.

What you guys think it should be?

NB. Please bear in mind that this year is a Leap Year and has 366 days. The current Gross Interest Rate for a HiSAVE account for the whole of January is 6.23% (6.41% AER). January, of course, has 31 days. The Tax Debits are 20% of the gross interest paid.

As most of us HiSAVERS know, ICICI Bank (UK) Ltd did have a 'technical problem' with the payment of interest for January. Hence the reason for the TWO gross interest payments and TWO tax debits. They sent out the following e-mail to clients:

[FONT=Arial, Helvetica, sans-serif]Dear HiSAVER[/FONT]

[FONT=Arial, Helvetica, sans-serif]In accordance with the HiSAVE terms and conditions we pay you interest on your HiSAVE account on the last working day of every month. [/FONT]

[FONT=Arial, Helvetica, sans-serif]Due to a technical problem, we were unable to credit the correct interest amount to your account on the 31st of January, 2008. The problem has since been rectified and the correct interest amount has been credited to your account on the 4th of February 2008, with a credit date of 31st January 2008. The credit date of 31st January, 2008 ensures that your future interest earnings are computed correctly without you losing out on a single day of interest.[/FONT]

[FONT=Arial, Helvetica, sans-serif]We apologise for the inconvenience this may have caused you.[/FONT]

[FONT=Arial, Helvetica, sans-serif]In case you have any questions or require any clarifications,please feel free to call us on [/FONT]
[FONT=Arial, Helvetica, sans-serif]080 81 31 41 51 or write to us at [EMAIL="ukdirect@icicibank.com"]ukdirect@icicibank.com[/EMAIL][/FONT]

[FONT=Arial, Helvetica, sans-serif]Sincerely,[/FONT]
[FONT=Arial, Helvetica, sans-serif]Sunil Matta[/FONT]
[FONT=Arial, Helvetica, sans-serif]Head – Service Delivery[/FONT]

knights

It should have been about £43 less 20%. Someone may be more accurate than that.

There has been discussion on the site already about this. Fortunately mine was ok first time.

Wait for other replies and another poster may tell you how they resolved it.

regards

zxcvbnm_2

If your balance was £7922.66 for the whole of January the calculation would be as follows -

£7922.66 * 0.0623 = £493.58 * 31/366 = £41.81

I calculated that my interest was originally understated by about 13%, using this figure on your additional interest of £5.39, the total interest for January would be £41.46, which would appear to back up your claim.

£5.39 * 100/13 = £41.46

This is based on the assumption that there were no withdrawals from your account during January.

DocProc

zxcvbnm

So when you say..

I calculated that my interest was originally understated by about 13%, using this figure on your additional interest of £5.39, the total interest for January would be £41.46, which would appear to back up your claim.

£5.39 * 100/13 = £41.46

..I take it to mean that in my case, the specific amount of underpaid interest required was calculated correctly as being £5.39 and actually paid to me on the 4th February (and also taxed at 20% correctly too).

However, it is the initial amount of interest credited, which was the £17.63 (taxed at £3.52) and paid on 31st January, which was an incorrect payment.

How 'interesting'. Thanks for doing the 13% calculation. This shows the problem up a lot more clearly and actually throws some light on what might have happened.

I'll take a bit of a guess on this about how this kind of error occurs.....

For the first, and incorrect interest calculation, an incorrect balance has been used somehow. It seems to me one way this calculation error can happen is when the interest is calculated manually and a transposition error on the original account balance is made for the first payment.

For the second payment, the one that corrects the 'technical error' that was mentioned in their e-mail, well this time, the correct account balance has been used. There hasn't been a similar sort of transposition error for the account balance when the calculation has been done.

I'll put this to them tomorrow as a suggestion. It might have to be later on in the day though.

DocProc

Thinking about this a little bit further...

I guess they could have used the wrong number of days in the month too...??

If one uses '13 days' instead of '31 days' for the first calculation of interest:

£7,922.66 x 0.0623 = £493.58 * 13/366 = £17.53

I got £17.63

This was 18 days' worth short!

zxcvbnm_2

The actual difference originally understated was 12.9%, or 4 days interest e.g. 4/31 = 12.9%.

Using this figure on your additional interest of £5.39 * 100/12.9 = £41.78 of gross interest due for the month. This is almost exactly the same as my original calculation - £7,922.66 * 0.0623 = £493.58 * 31/366 = £41.81.

If your account was opened before December and there have been no withdrawals since, then the interest in January should be more than December. This might be the easiest way to explain it to ICICI, if it applies to you.