Natwest interest rate error

Terry_Towelling · 12 May 2018 at 4:46PM

Anyone out there got a Savings Builder account with NatWest? They've just changed the way they pay their tiered rates. Up to £5K saved and you get 1.5% in any month you grow your balance by £50 or more. They used to pay interest in two parts, 0.1% regardless of whether you paid in that month and a bonus of 1.4% if your balance grew by £100. They now just make 1 payment but have forgotten to set it at the right level. They are just paying the 1.4% bonus amount. Someone has forgotten to change the programming when they changed the way the account works. I have complained and been fobbed off and so complained again. I advise you to check the amount you've been paid - and don't complain by phone unless you get inclusive minutes because call costs just have the effect of reducing your return even further - unless you ask for compo. Complaining using the online form also means that they get more time to understand what you are telling them rather than putting them on the spot and turning them all 'defensive'.

ctdctd · 12 May 2018 at 5:26PM

They have done similar before and the extra was added a few weeks later IIRC

I agree that it seemed to be only 1.4% last month.
March, I got £1.84 but April only £1.67 despite an extra £50.
That's too low even allowing for April only being a 30 day month.

Ah, thanks AirlieBird - hadn't seen the earlier thread.
Makes sense - probably!

AirlieBird · 12 May 2018 at 5:34PM

Thread explaining it here
forums.moneysavingexpert.com/showthread.php?t=5837535

Terry_Towelling · 12 May 2018 at 7:54PM

Thanks for the redirect to the earlier thread. I had completely overlooked the fact that their statement month runs from 2nd last BD to 2nd last BD. So, yes, only 28 days worth of interest. Just done my sums again (more complex with 3 different pay-ins throughout the month and not knowing whether you get interest for the day you pay in or from the next day onwards) and it still doesn't work out right. Looks like I've got 5p too much! Whoo Hoo! Anyway, they now pay no interest if you don't increase your balance by £50+. It is therefore even more important, when withdrawing or not reaching the £50 limit, that you remove it all and stick it in some other interest-paying account for that month and then pay it all back in next month. Looks like I'm eating humble pie in my next missive to NatWest.

Terry_Towelling · 12 May 2018 at 8:17PM

I'm really losing the plot here. Someone please help. Interest payments in May related to the period from 2nd last BD in March (i.e. 28/03 as 30/03 was a bank hol) to 2nd last BD in April (i.e. 27/04). If both end dates are included in the calculation that is 30 days - not 28. So they have short-changed us all - haven't they?

RG2015 · 12 May 2018 at 11:11PM

The 2nd last day is not the interest calculation day, but only the day by which the balance needs to have been increased by at least £50.

The interest calculation day for March was Monday 2nd April (Easter Monday) hence 2 days of April were included in the interest payment made on Tuesday 3rd April.

The interest calculation day for April was Monday 30th April and since 2 days of April had already been paid the April calculation was only for 28 days. If you check your March payment you should find that the interest has an extra two days in the calculation (33 days instead of 31 days).

Since 1.50% x 28 / 30 = 1.40%, it could be inferred that the previous second entry of 0.10% had been overlooked by NatWest. They have messed up in the past but on this occasion they have calculated the interest correctly.

Terry_Towelling · 13 May 2018 at 9:34PM

Thanks RG2015. Looks like I was working on an incorrect premise to begin with and then moved to another incorrect premise.

My original premise was:-

1. Increase your balance by 28th and that increase will be used in the interest calculation for that calendar month.

2. Interest will be paid on 1st working day of the next month for interest that accrued only during the previous calendar month - e.g. 28 (29 leap year), 30 or 31 days.

3. If 1st working day happens to be 3rd, the interest paid on that day will still only relate to the days of the previous calendar month.

What you seem to be saying is that if interest is paid on 3rd of the month it also includes amounts accrued for 1st and 2nd of that month. So interest is calculated on the number of days between interest payment dates and has nothing to do with calendar months. Have I got that right? If so, it seems a bit daft to me - but, I guess that's just me.

RG2015 · 13 May 2018 at 10:34PM

Interest is calculated from the first working day of the month to the day before the first working day of the next month.

For March 2018 this is from Thursday 1st March to Monday 2nd April (Easter Monday) and is 33 days.

For April 2018 this is from Tuesday 3rd April to Monday 30th April and is 28 days.

For May 2018 this is from Tuesday 1st May to Thursday 31st May and is 31 days (Yea!).

If it wasn't for bank holidays and weekends it would always be like May 2018, with the correct number of days.

It's easy when you think about it. Yeah Right!

Terry_Towelling · 14 May 2018 at 8:45PM

Have investigated further and also asked NWB for clarity. They will get back to me. However, their T&Cs don't back up the 28 day argument. They clearly state that their interest-calculation period runs from Close of Business (COB) on the 2nd last BD of the month to COB on the 2nd last BD of the following month. Interest so calculated will then be paid on the 1st BD of the next month and be available on the following day. So interest paid in May relates to the period from COB on 28/03 (30/03 being a Bank Hol) to COB on 27/04 - which is 30 days. So NWB has got it wrong and we have all been short-changed. So let's wait and see what they actually come back with.

RG2015 · 14 May 2018 at 11:06PM

You may be right about the interest calculation period but were you paid for 33 days in March?

Terry_Towelling · 15 May 2018 at 11:51AM

I believe I was - which means that what NWB has published as their calculation period and how they pay the result of this calculation is not correct. The wording in their leaflet is quite unequivocal about the period for the calculation and equally so about the date when they will pay the result of that calculation. It makes no mention of including the extra days between the end of the calculation period and the payment date and leads one to believe that those days will form part of the next month's calculation. I wonder what they will say about that - or if they even care.

Natwest interest rate error

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