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    • frankle
    • By frankle 6th Jul 19, 10:27 AM
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    frankle
    How is interest calculated?
    • #1
    • 6th Jul 19, 10:27 AM
    How is interest calculated? 6th Jul 19 at 10:27 AM
    Wondering whether anyone could shed some light on how SLC calculate how much I get charged each month in interest. For example, take a random month from my statement last year:

    The balance is 64,054.57 at the start of the month. They add 160.93 interest at the end of the month based on a 3.10% interest rate.
    Now let's try to check this amount:
    (3.1% / 365 days) * 64,054.57 = 5.44 is the interest added per day
    5.44 * 29 days = 157.77
    5.44 * 30 days = 163.21

    So how do they get 160.93?
    I've called them to try to get to the bottom of this but, predictably, they couldn't tell me what instructions the computer was following to give this result. They did tell me that interest is calculated on a daily basis, but that I should see a financial adviser if I was concerned their calculation is incorrect.

    If I recalculate interest on a daily basis (in Excel), I get 157.95 after 29 days and 163.41 after 30. I've also tried using the more accurate figure 365.24 for the length of the year in days, but nothing can close this gap of about 3 pounds. Over 30 years, getting charged 3 pounds different every month is going to add up.
    Is the interest calculation more complicated?
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