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overdraft Interest fees are legit as they (The bank) are providing a service. But the overdraft interest on a charge is not because the interest although legit is based upon the illegal charges your are seeking repayment on. If you didn't get the charge you wouldn't get as much of the interest slapped on the account.
Calculating the amount of interest effected by charges isn't the easiest task. If your using a spreadsheet then it's easier. layout all your charges and interest payments in date order. You can then see where the interest payments fit in. Unless you have a very large overdraft you are likely able to claim the later interest payments back in full as in my case, if I hadn't had years of charges my bank would not need the overdraft.
Can you elaborate on the process you used? I have all of my interest and overdraft fees in Excel in date order but am not sure where to go from here.
This is the bit that I am really stuck on aswell, Ithought the spreadshett was for calculating interest when you make a claim via the court. I have been in overdraft for virtually the whole of 6 years. I have a lot of Overdraft Interest charges but thought I cou;dn't claim for these.
Allocation questionaire returned to the court-18/7/06
Allocation Questionaire rec'd dated- 6/7/06
Acknowledgment of Service rec'd full defence- 15/6/06
Reply from solicitors want more info.-14/6/06
Money claim filed £1653 - 7/6/06
Reply rec'd to LBA-27/5/06
LBA sent - 19/5/06
Reply from LLoyds TSB a big fat NO - 12/5/06
1st request for payment sent - 09/05/06
Statements Rec'd - 21/4/06
Data Protection Act request sent to Lloyds - 22/3/06
If you had a nil balance and then charges were applied which made you overdrawn and only the charges made this so, you could include the interest charged.
However it is a very messy business when you try to apportion overdraft interest when it is mixed with normal overdraft interest and any overdraft interest containing dd/so/chq the bank did not stop.
Vamp and/or I will be posting a killer argument regarding the whole issue of interest very shortly (before tomorrow evening...) - watch this space
Alecto, Magaera et Tisiphone: Nemesis on Earth is come.
All advice and opinions given by Spiceskull are personal, and are not endorsed by Consumer Action Group or Bank Action Group. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.
Do you think it's still worth putting interest in the claim as a rough/estimated calculation and then allow the bank to contest/question it as they see fit....if they did it would then be down to them to calculate the correct proportion.
Seemingly I doubt that they would this as they their trend is not to come to court and question anything.
I think there are at least two methods of calculating reclaimable overdraft interest being used by members of this site and I would welcome your comments on them both but particularly on Method 2 (see below). I didn't realise there was a Method 2 till a 500 Watt halogen lamp popped on in my head this morning - it can take a while to get your head round some of these things. When I realised it, the rare comments on this site that alluded to it made complete sense.
This is where it gets a bit involved and lengthy, stay with it, it should be worthwhile in what it yields for your claim...
Method 1: Amend the template spreadsheet with your own to include a column for "bank's reasonable cost" and a column for "charge minus bank's reasonable cost", and with extra columns over on the right to log the date of the charge, the date you were next in credit, a datedif column for difference between these two, and then days x interest rate. Where interest rate is the overdraft interest rate applicable for that period (typically 17.7% for a Select account, but check rates and times with bank, and for your type of account, to be strictly accurate, terms and conditions apply etc....). This method calculates the overdraft interest charged on the penalty element of the unlawful charge and is recoverable because it is interest on a penalty dah, dah, dah. Unfortunately this method does not allow for the fact that due to unlawful charges being levied, you go into overdraft sooner than you otherwise would and hence also incur overdraft interest on a larger sum than you otherwise would. (By the way, if you were in credit when the charge was levied, for the date the charge was levied put the same date as 'date next in credit' so number of days is zero).
Still awake? Good..
Method 2: This is why it's best to have your DPA request in first so you have all data to hand: Lets assume your overdraft limit is £1500. Lets assume a typical charge is £20 and you think £2 is a fair estimate of the bank's costs. Start by adding up the penalty bit of your charges from six years ago (i.e. all the £20-£2=£18 bits). Lets assume at some point, say 1 June 2003 that this penalty element adds up to £1500. Now, your overdraft is purely sitting there to meet the penalty element - So ALL overdraft interest, overdraft excess fees, unpaid direct debits, etc (but not monthly account charge and there might be others I haven't thought of here) for items that would not have been levied IF you simply had a functioning overdraft limit of £1500 (i.e. one that was not wholly rammed with the penalty bits) and AFTER 1 June 2003, is surely recoverable and fully justified?
Method 2 produces a higher figure for your claim. It accounts for penalties producing overdraft interest. Incidentally, in the example I think that a £20 charge after 1 June 2003 would be justifiably recoverable in it's entirety because it resulted from lots of previous £18 penalty bits.
I know it's dull, so dull in fact that only one of you has made it this far and congratulations to you if you are that individual - what do you think my analytical accounting/engineering friend?..
Opinions / advice of Bean are independent, informal, without prejudice, without liability, not CAG endorsed. If in doubt, ask a qualified professional.
Lets assume you are already overdrawn or that the charge takes you overdrawn.
so...
Method 3. The bank will charge you interest on your overdraft, and if part of your overdraft in made up of charges then they will charge you interest on that as well. Now you can only be expected to take reasonable steps in calculating the money you are owed, so it's reasonable to assume that they have charged X amount of interest each month for X number of months therefore they owe you X amount of money. (remember that as the interest is added each month they will then calculate the next months interest based on your new overdraft amount which now include your charge plus any interest added to that charge)
Method 3 will produce a figure which is at the very top of what you may be owed, if the bank don't think you are owed this amount ask them what you are owed and how they calculated it, overwise well done you've got a bit more from them then you should have.
Don;t deduct any amount that you think they should have charged you, let them tell you what the charge should have been.
At the end of the day they have acted unlawfully, and you have taken all reasonable steps to calculate the money owed.
Opinions / advice of Bean are independent, informal, without prejudice, without liability, not CAG endorsed. If in doubt, ask a qualified professional.
If I understand correctly what your saying in method 2 then no your not right.
Let me explain.
Your saying that you should wait until the total charges reach you overdraft limit, once this is done there can be no agruement from the bank that the overdraft has not been used by you, but by them to cover their charges, at this point you can justify claiming interest.
However the bank will have been applying interest to the charges from the day they are applied to your account, if you are not overdrawn at this point then they have not added interest and therefore you can not claim it, but once you go overdrawn even if it's weeks later and it's not the charge itself that puts you overdrawn you can and should start charging interest (you can claim that you have not yet paid the charge and therefore it is part of your overdraqft.
Your method means that the banks will get away with taking a lot of interest that they would not have had if they had not added charges to your account.
Yes my method will give you a figure that is high and i understnad that you do not want to claim more then you should but if you state "I calculate that you owe" then it is down to them to prove you wrong, and as long as you are prepared to look at their calculations and alter yours if need be then you are acting reasonably.
Having said all that if you use your method the banks can not say it's wrong, after all you would not be claiming back everything they took.
Thank you very much indeed for such a patient and detailed reply.
It has helped me to get up to speed and will help others make sense of what can initially be confusing.
Yes you are correct, Method 1 and Method 2 do not fully represent what should be claimed.
This leads me to an associated point which I summarise here for completeness. It seems to me that any method that relies on cumulative unlawful charges resulting in snowballing consequential charges does not assist, and may even scupper, a sever claim [i.e. one that exceeds £5000 but is then severed by date to produce two (or presumably more?) claims].
If for example a severed claim attempts to look at 2004-2006 and attempts to claim back all costs except the account charge based on previous cumulative unlawful charges filling the overdraft, it can not truly be a sever, because it is associated with previous charges. Presumably a sever should stand alone and be fully justifiable in it's own right. The bank could argue that such a claim for 2004-2006 for £4500 relies on cumulative unlawful charges prior to 2004 so should be consolidated with the penalty bit of those pre-2004 charges, potentially (at the court's discretion) pushing it beyond Small Claims into Fast Track.
This leads me to conclude that where a cumulative method is rightly used and the claim exceeds £5000, the best course of action would be to engage a solicitor to handle a Fast Track claim - Hence I assume, examples such as "molly-in-the-trolley" on this site which was settled prior to reaching Fast Track. The alternative is to sever and not rely on a cumulative method, which reduces the total value of the severed claims to less than the Fast Track claim total.
I suspect that the correct, get-back-what-you're-truly-owed cumulative method lends itself to a wider claim for consequential losses. I imagine this could be the basis of a claim for people who were pushed into bankruptcy, default, or other adverse financial position.
Opinions / advice of Bean are independent, informal, without prejudice, without liability, not CAG endorsed. If in doubt, ask a qualified professional.
Not being an accountant or indeed even a barely competent user of Excel, I am seriously struggling on this point. Am today sending initial letter request for repayment of charges but see know way of my being able to calculate the interest. The sum involved is just under£2k, stretching back to mid 2002. What would be the implications of stating in the letter "plus an as yet undetermined amount which you have charged me for interest for the sum which you have taken."
Im not too sure, can you start your own thread, or tag it onto your own thread if you have one running, that way someone will see it better rather than hijacking someone elses thread.
Calculating interest?
Originally Posted by devans
overdraftInterest fees are legit as they (The bank) are providing a service. But the overdraft interest on a charge is not because the interest although legit is based upon the illegal charges your are seeking repayment on. If you didn't get the charge you wouldn't get as much of the interest slapped on the account.
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Re: Calculating interest?
