Claiming for Interest

[victimnomore]

I’ve noticed that a number of forum members are finding the subject of “interest” confusing. It would be a real shame if anyone was put off claiming money they were rightly owed because of this.

So I’ve tried to set out an explanation here which I hope will help some people, particularly any new members who might be finding things getting more complicated than they need.

Please understand, I am NO EXPERT. This is just my understanding of the subject and I hope anyone who knows better will criticise or correct as necessary.

But, in the hope that it might help, here goes ... …

There are two types of interest we are concerned with:-

1) Overdraft Interest

Overdraft Interest is charged to a bank account for any period for which the account is overdrawn. The amount charged varies due to the length of time the overdraft was in existence (of course) and also the rate, which is different for different levels of overdraft. In theory, Overdraft Interest is perfectly legitimate - they are charging us for the service of lending us money. However it becomes important to our claims when we remember that part, or perhaps all, of our overdraft at any particular point in time has been caused by the banks own imposition of charges which we are claiming to be unlawful. Logically, if the charges are unlawful, any interest on overdraft amounts caused by those charges should also be illegitimate, and therefore reclaimable. This is the interest referred to in the initial letter.

It can be very tricky to work out exactly how much of your overdraft interest has been caused by unlawful charges. For this reason, and the fact that it’s always going to be a relatively small amount, many people don’t bother to reclaim it, and leave reference to it out of their letters.

2) Statutory (County Court) Interest

When, and not before, you get to the stage of putting in your court claim you are entitled to add interest to the amount claimed under the County Courts Act 1984. This interest is applied at the rate of 8% per annum from the date the money was due to you, up to the date of your court claim. In our case this means a separate calculation for each charge being reclaimed, the results then being added together to make up the total to be included on the court claim (the spreadsheet in the library does this for you).

To cover the extra interest for the period between filling in your claim form and the day you actually get the money you’re owed, there is provision to keep on adding interest at the rate of 8% per annum (equivalent to 0.022% per day). This is achieved by multiplying the total claim before interest by 0.00022 to get the amount by which your claim increases each day. This is the daily rate to be included on your claim.

It should be noted that it will prevent you from being awarded statutory interest in court if you do not claim it on your claim form

I hope that these notes might make some of you feel a little more confident about at least this aspect of the process.

[Glenn UK]

In the spirit of the spanish inquisition.......there are three type of interest we are interested in.

 

The two above and contractual interest.

 

Contracutal interest is what you want to charge on top of the charges and interest you have paid.

 

The contract you entered into with the bank or CC company had a variety of rates depending on how you borrow the money.

 

Banks have an authroised overdraft rate and then a punitive levle of interest where you exceed the agreed limit or dont have an agreed limit in the first place.

 

If you are re-claiming charges from a bank this is the logical rate to claim since this represents mutuality and recipricoty i.e. when you use their money without their permission they charge you this rate and therefore you should do the same for them.

 

With CC companies however, the situation is more complex in that (as far as i know) they dont charge a higher rate for exceeding the credit limit. Instead they impose a charge.

 

What i did with MBNA was applied their cash advance rate since in my view this is similar i.e. they have taken cash from your account.

 

In boht cases however, the rates are compounded i believe by the company you have a contract with and so in the true spirit of reciprocity you do the same to them.

 

I expect someone will come along in true pythonesque fashion and add a fourth interest matter, so be it.

 

JMHO

 

GLenn

 

PS excellent idea Victimnomore.

[victimnomore]

Now I like your style, Glenn. So what we need now is a spreadsheet that calculates 2.05% per month compound interest, instead of 8% per annum (0.67% per month) simple interest. Now that's quite a difference!!!!!!!!!

[bill-k]

Ah-Haaah !! I EXPECTED HIM !!

Yes, Victimnomore, this guy Glenn is good. You can't palm him off with a Norwegian Blue. Check out "A New Way of Looking at Interest" thread (when you've got a free weekend !!) - Contractual interest compounded daily - just like wot they done to us (reciprocity with a vengeance). It knocks 8% Statutory into the Tidysan. Only problem is - some people are so shocked by the difference, they think there's been some mistake and bottle out.

[superam]

And it usually puts the claim over the £5k threshold.

[Glenn UK]

Now I like your style, Glenn. So what we need now is a spreadsheet that calculates 2.05% per month compound interest, instead of 8% per annum (0.67% per month) simple interest. Now that's quite a difference!!!!!!!!!

 

I think that Vampiress has prepared one and you can get to it via her signature.

 

Alternatively MINDZAI has one and it can be downloaded from his signature.

 

HTH

 

Glenn

[bill-k]

True, Superam, but I don't see that as a reason not to claim it. I hope you haven't. I see it as just another hoop to jump through. Splitting the claim is one possible way to keep it in the SCC track. The harder I'm forced to work to get my money back, the less guilty I will feel about claiming every last penny. And my guilt level is already below zero, so it becomes a pleasure !!

 

Oh, and Victim - there are some excellent ready-made Compound Interest spreadsheets in the library - courtesy of Vampiress. Also Mindzai has an excellent one in his sig.

[bill-k]

Hi Glenn - sorry, I just trod on your toes delivering the same info. I didn't expect you that time !

[blueskies]

I would advise against using the 8% CCA interest as you are perfectly entitled to use the contractual interest fee which is normally much more (in the case of my Capital One account it is 4 times more). There is some debate about interest being part of the £5000 small claims court limit. I am of the opinion that any interest is outside the amount considered for allocation (so the £5000 limit only applies to charges and DPA cost). I have asked Bankfodder this and am awaiting a reply.

 

The CPR (Civil Procedure Rules) that apply to all County Court Cases states.

 

 

CPR part 26.8 (2)(b) states.

 

(2) It is for the court to assess the financial value of a claim and in doing so it will disregard

 

(b) any claim for interest.

 

This is the viewpoint that Patricia Pearl has in her book " Small Claims Procedure"(available from this site).

[bill-k]

Blueskies - thanks. The view I had on this so far was that Contractual interest is part of the Specific amount being claimed, and as such is counted as part of the "£5000" - whereas Statutory is not.

I would prefer my view to be wrong, though, and your quote from CPR looks hopeful. I await BF's reply to you.

[Glenn UK]

To comment further on Blueskies excellent advice.

 

When filing you would normally put the CCA interest as an alternative to the contractual rate.

 

If the court decides that you have not emonstrated that there is any reciprocity or mutuality in the contract, then you wont get any interest unless you insert a clause asking for CCA in the alternative.

 

Ive looked in Pearl too and interpreted it slightly different.

This interpretation is supported by my contacts with the courts too.

 

When I spoke to the court about this issue the way it came across to me is that Sec 69 interest is NOT included in the value of the claim for allocation or value pruposes. This is due to the fact thaqt until the court awards the interest you dont know how much you will get.

 

I do accept that they would normally award the 8% but there is some discretion in theory.

 

However, when you claim contractual interest it is in theory part of your claim in exactly the way the charges are. Its part of the contract.

 

So contractual interest is part of the claim for value and allocation purposes.

 

I realise this is not referenced but it does seem logical to me.

 

HTH

 

Glenn

[Glenn UK]

Hi Glenn - sorry, I just trod on your toes delivering the same info. I didn't expect you that time !

 

LOL no worries Bill, i wear toetectors!!

[bill-k]

Dammit, Glenn. I realise you're just the messenger, but I could shoot you sometimes !!

[Glenn UK]

bill

 

FWIW I have a claim against abbey that is a long way into multi track with the contractual interest.

 

Without it its only a little bit out of small claims.

 

If interest didnt count it would be a single claim asking for SCC,

 

I wish i could tell you the reverse.

 

Glenn

[bill-k]

I take you seriously, Glenn - you do know your stuff. I guess I'll have to "Put down the bagel and step away from the dip."

[Glenn UK]

Bill

 

I cannot claim to 'know my stuff'. All i can say is that i have read up for my particualr circumstances and feel confident about the route im taking.

 

I would always urge others to check out what i say because Im not a lawyer, just an engineer.

 

GLenn

[bill-k]

Got that Glenn - goes without saying. But we all need reminding !!