itsamomentintimes OH vs LloydsTSB

[itsamomentintime]

hello
re LloydsTSB credit card, does anyone know what the contractual interest rate is? on the statement, only a monthly rate of 1.805% is quoted, would that mean that the yearly rate is:

1.805 X 12 = 21.66%

?

[GuidoT]

You have calculated the flat rate, i.e. not compounded or the APR.

Lloyds will charge you a compounded rate (as they charge you monthly) that would be a little higher around the 23% mark. It is up to you which rate you would use, but personally I would use the flat rate, i.e. your 21.66% as a contractual rate.

[martinhw]

Your monthly rate of 1.805% equates to 23.95% APR.

[itsamomentintime]

thanks for the info, think i will go with 21.66% as i know how i came to that amount (in case i am asked to explain the figure in the future)

[itsamomentintime]

statements arrived a few days ago - pretty quick!!!

PRELIM letter on its way

[itsamomentintime]

25th January 2007

Request for repayment of charges

Dear Sir/Madam,

ACCOUNT NUMBER: XXXXXXXXXX

My request
I am writing to ask you to refund to me the charges which you have levied from my account over the last 5 years.
I now understand that the regime of fees which you have been applying to my account in relation to direct debit refusals, exceeding overdraft limits and so forth are unlawful at Common Law, Statute and recent consumer regulations. If you say that they are not, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put by as a result of my breaches, in order to reassure me that your penalties really do reflect your costs.
Additionally, it has now been confirmed that your particularly high level of penalties are considered to be unfair per se by the OFT who reported on the 5th April 2006 and are therefore presumed to be unlawful in the absence of specific proof to the contrary.

Your responsibilities
I would draw your attention to the terms of the contract which you agreed to at the time that I opened my account. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

I am frankly shocked that you have operated my account in this way as I had always reposed confidence in your integrity and expertise as my fiduciary.
I consider that your repeated representations that your charges are fair and reasonable are deceptive and that they have deceived me into agreeing to pay them.
Your concealment of the true nature of your charges has prevented me from asserting my right until now.

What I require
I calculate that you have taken £92

I enclose a schedule of the charges which I am claiming with this letter. Please note that if I am forced to submit a claim, I will also be adding contractual interest to the amount claimed.




My targets to resolve this matter
I hope that you will enter into a sincere dialogue with me about this matter and I am writing this letter to you on the assumption that you will prefer to do this than merely respond with standard letters and leaflets.

I will give you 14 days to reply to me accepting, unconditionally, my request in principle and letting me know a date by which I will receive payment.

If you do not respond, or you do not respond positively, within this time period, I shall send you a letter before action giving you a further 14 days in which to reflect. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

After that, there will be no further communication from me and I shall issue a claim at the expiry of the second deadline



Yours faithfully,

itsamomentintimes OH


Schedule of charges
Account number XXXXXXXX
06/05/04 late charges £20
03/03/05 late charges £20
03/08/05 late charges £20
03/02/06 late charges £20
03/08/06 late charges £12

[lucid]

Originally Posted by itsamomentintime

thanks for the info, think i will go with 21.66% as i know how i came to that amount (in case i am asked to explain the figure in the future)

Hi there,

I just wanted to point out that your rate of 21.66% (achieved by taking your monthly interest rate of 1.805% and multiplying it by 12) isn't actually a correct annual rate.

Originally Posted by martinhw

Your monthly rate of 1.805% equates to 23.95% APR.

Martinhw has given you the correct annual rate of 23.95% and you should be using this if you are claiming contractual interest. The reason I'm pointing this out is that the rate you have quoted above is lower than the true annual rate, but you've also kind of made up your rate of interest. The idea in contractual is that is an interest rate that exists in the contract, and multiplying the monthly rate by 12 is not a rate that will exist in your contract.

Lucid

[itsamomentintime]

so where does the figure of 23.95% come from, if 1.805 X 12 is 21.66%?

[lucid]

Originally Posted by itsamomentintime

so where does the figure of 23.95% come from, if 1.805 X 12 is 21.66%?

Hi,

Because the banks compound their interest monthly, you can't find the annual rate by multiplying the monthly by 12. Compounding is achieved by adding interest to your starting amount and the resulting total becomes your opening balancefor the next month, which then inturn has interest added to it, etc. (It probably makes mroe sense when you see it in the tabel below ).

It's really easy to find the annual rate - if you can't find it anywhere on your bank's literature (and providing you know your monthly rate ). Using £100 as your starting point in month 1, add 1.805% to that and you will get £101.81 - so you've earned £1.81 in interest. You then take £101.81 as your starting point in month 2, add 1.805% to that and you will get £103.64. The table below completes the process up to the end of 12 months:

1. £100.00 + 1.805% = £101.81
2. £101.81 + 1.805% = £103.64
3. £103.64 + 1.805% = £105.51
4. £105.51 + 1.805% = £107.42
5. £107.42 + 1.805% = £109.36
6. £109.36 + 1.805% = £111.33
7. £111.33 + 1.805% = £113.34
8. £113.34 + 1.805% = £115.39
9. £115.39 + 1.805% = £117.47
10. £117.47 + 1.805% = £119.59
11. £119.59 + 1.805% = £121.75
12. £121.75 + 1.805% = £123.95

So at the end of your year, by compounding, you have earned £23.95 interest on your original £100. And because you have used £100 as your starting point the end result is actually your annual rate as a percentage: 23.95%.

I hope this has helped. The reason I pointed it out is because 21.66% is not the rate that the banks will use when charging you interest, so if you're going for contractual it really has to be the rate that is in the contract. If you want to double check the rate then I'm sure you can easily contact your bank and get them to tell you if it's not shown on any of your statements or notices of being charged.

You won't need to explain how you achieved this rate to the banks as they will know full well it's their annual rate that they apply to your account. But obviously it's better to understand how the rates are achieved ourselves.

Good luck. Lucid

[itsamomentintime]

so they earn interest on the interest

nice work if you can get it

[itsamomentintime]

fob off received today, LBA will be sent - will keep you posted

[itsamomentintime]

recieved CCA yesterday, all seems in order BUT

there is no credit limit mentioned

does this mean its not been properly executed?