Why is no one claiming the contractual rate of interest???

[Mindzai]

Paintball,

 

If you don't want to claim contractual interest that is fine of course, but despite all the waffle, it really isn't that hard of a concept when you get right down to it.

 

When we use the Bank's money without authorisation (using a debit card without funds available, paying a direct debit without funds available etc), the bank charge us a penalty. The also then charge interest at their unauthorised rate (usually 25-30%) on the amount of their money that has been used.

 

So for example if you have a £100 direct debit come out of your account, but you only have £50, you will use £50 of the bank's money without authorisation so you pay interest on that £50 at their unauthorised rate until you have repaid it.

 

The ability for them to charge you this rate is written into the contract you have with them.

 

English contract law states that a contract between two parties must be fair to each party. The argument for charging contractual interest relies on this fact. If they have a clause in the contract that they can charge you 30% if you take their money without authorisation, it is only fair if you can also apply the same rate when they take your money without authorisation.

 

The phrase you will often see associated with this idea is "mutuality and reciprocity". There is another phrase, "fairness and balance" which essentially means the same thing.

 

The Unfair Terms in consumer Contract Regulations are intended to regulate the fairness of contracts, and so unsurprisingly they have something to say about "fairness and balance":

 

...inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him...

 

This is not the easiest thing to interpret and understand, but fortunately the Office of Fair Trading publishes guidance for these regulations. Their guidance document clarifies the above regulation:

 

Terms Excluding Or Limiting Liability, paras 1a and 1b of Schedule 2 : Fairness and balance require that both parties to a contract are equally bound by it, and equally liable to pay compensation for failure to abide by it. A term which could be used – even if that is not the intention – to prevent or hinder customers from seeking redress when the supplier is in default tends to upset the balance of the contract to the consumer’s disadvantage.

 

So this is the basis for claiming contractual interest. It really boils down to the fact that the clause in the contract that allows them to charge us contractual interest has to work both ways.

 

As for the calculation of contractual interest, that is definitely a more complicated matter! However there are spreadsheets to do this for you. I can't comment on the Google sheets because I haven't properly used them, but they seem to work for a lot of people. The spreadsheet in my sig is designed to be as simple to use as possible, but if you need help I will be happy to provide it, you just have to PM me.

 

There are a few concepts and processes that are common to each of the spreadsheets.

 

When you will them out you include the date a charge was taken from you, the description of the charge and the amount of the charge. For my sheet, and I assume the Google sheets, this is all the information you need to include aside from the interest rate (which is entered on the 'notes tab' in the case of my sheet). From there the spreadsheet will work out how long you have been without your money, apply the contractual rate and tell you how much you are owed in interest.

 

From a user's perspective, this is no different to using the 8% sheet. The only differences occur behind the scenes in the workings of the spreadsheet, which you don't need to worry about.

 

You then may want to work out how much interest you have paid to the bank that you would not have had to pay had they not charged you. You are also entitled to claim contractual interest on this amount (it all boils down to the same thing - they have taken your money in the form of charges and interest on those charges, so you can claim contractual interest on it). Again this is also the situation with simple 8% interest, with the only differences being behind the scenes. You just need to enter the interest amount, the date it was taken and your account balance at the time.

 

My contractual interest sheet, and I would bet Vamp's ones too, are exactly the same to use as the 8% statutory ones with the only exception being that you have to put in your bank's unauthorised rate into a box. Although the calculation methods used are very different, the end result is the same - you put in your info, and get out a list of how much you are owed.

 

Again if those general guidelines are of no use I am always happy to help with looking at people's sheets, and if you used the Google sheets I'm sure bill-k or vampiress will be happy help too.

 

At the end of the day the choice to claim contractual interest or not is yours, but please don't make the choice because you don't understand how contractual works. It's seems a very difficult concept with various mysterious formulas and random jargon, but it is understandable by anyone, you don't need an accounting degree!

 

If you need any further clarification don't hesitate to ask. Understand your options fully and then make a decision.

[Mindzai]

if you use Mindzai's spreadsheet, you simply insert the bank's unauthorised rate, or any rate you want to charge...

 

As long as it is in the contract You can't literally insert "any" rate.

 

contractual interest increases a claim by about 3 times, and stat 8% by about .33 (a third).

 

This really depends on the amount of time that has elapsed between each charge. The amount of change will vary for each person

[Paintball]

My point, Glenn, if you were to read previous posts which were left in answer to my Q, is that i don't find it helpful for someone to tell me that if I don't claim interest then I don't know what I'm doing and don't derserve to get my money back!!

 

I asked the Q in good faith and am now genuinely more confused than ever ...

[Paintball]

I should add that Mindzai's response has been very helpful and his oofer of help is very much appreciated. However, the amound to charge is not obvious to me (and to many others acording to their posts).

 

[Mindzai]

My point, Glenn, if you were to read previous posts which were left in answer to my Q, is that i don't find it helpful for someone to tell me that if I don't claim interest then I don't know what I'm doing and don't derserve to get my money back!!

 

Bill's point (and he is quite right) is that you need to understand not only what rate you are claiming and why. In your original post you mentioned altering the rate in one of the 8% sheets to calculate contractual. This is not how it works as the calculation methods are different. Obviously you are not born with this knowledge, nobody is expecting you to understand this fully, but all you have to do is ask for help. However until you do understand why you can claim it, you shouldn't claim it, and that (i believe) is what bill meant.

 

You need a dedicated sheet that does contractual interest for you as described above. This will do everything you need.

 

I asked the Q in good faith and am now genuinely more confused than ever ...

 

What aspect is still confusing? Like I said it does seem difficult but ask questions and we will try to explain it. Don't chuck in the towel!

[redsonja]

Hi Vamps, Bill-K etc.

If the spreadsheets are working ok since Christmas then I shall trust what I have put in there. I only had doubt when I had seen a few posts so thanks for replying.

 

Just a thought...if for some reason they queried the CCI, could we not say it is up to the banks to prove we havent done it right...i.e. work it out themselves then?

 

Any thoughts?

[Mindzai]

I should add that Mindzai's response has been very helpful and his oofer of help is very much appreciated. However, the amound to charge is not obvious to me (and to many others acording to their posts).

 

 

The amount to charge is calculated using the interest rates set out in the contract between you and the bank. Which bank are you with? They all have rates published on their site.

 

Banks usually have 2 separate rates. The first, the authorised rate, is applies when you use an agreed overdraft, eg you have a £500 overdraft and a balance of £50. A £100 direct debit will take you £50 into your overdraft and leave you with a balance of -£50. Because you agreed a limit of up to -£500, you are only charged the authorised rate on the £50 you owe the bank.

 

The second rate, unauthorised, is applied when you go overdrawn without agreeing an overdraft, or you over your agreed overdraft limit. This is usually applied in the same situations where you get charged, ie you are using the banks money without authorisation.

 

My personal feeling is that logically charging them the unauthorised rate makes more sense. After all, we don't authorise them to take our money!

 

To actually calculate the mount, grab the Excel sheet from my sig, and on the notes tab put in the unauthorised interet rate your bank uses. then go ahead and enter your charges and interest as normal. This will then list all of the interest you are owed on each charge as well as a total figure.

[Mindzai]

...Just a thought...if for some reason they queried the CCI, could we not say it is up to the banks to prove we havent done it right...i.e. work it out themselves then?

 

Any thoughts?

 

Exactly right. We are lay-persons, and imo using any of these sheets is going above and beyond what would be expected of lay-persons in calculating interest. like you say, if the bank's argue, the Judge would just ask them to provide more accurate figures.

 

However all of the sheets are pretty accurate, I doubt they'd be more than a few pounds out of the bank's figures even on large amounts.

[tifo]

Mindzai ..

 

i did find one problem with your spreadsheet, in that if i insert the sort code 05-02-12 on sheet 1, this actually returns the date! so i did it as 05 02 12 ...

[Guest Battleaxe]

The spreadsheets are working fine Redsonja. I used Vamp's No2 last night for working out the contractual interest by MBNA come with a lovely total of amount paid £2385.95 Interest at 24.90% comes to £1123.98 from 2003 so claiming back £3509.93.

 

I am in the money, I am in the money. Getting back what they have made from me.. i love the terms mutuality and reproci whatever, I can't pronounce but it means reciprocal..

[Glenn UK]

My point, Glenn, if you were to read previous posts which were left in answer to my Q, is that i don't find it helpful for someone to tell me that if I don't claim interest then I don't know what I'm doing and don't deserve to get my money back!!

 

I asked the Q in good faith and am now genuinely more confused than ever ...

 

I'm sorry if i missed your point, the post i refered to didn't seem to include a question but a series of statements basically saying how you were confused, now that MINDZAI has kindly spent a lot of effort setting out some thoughts, i hope that has helped

 

FWIW I don't know of anyone on here who is being paid to contribute, I make this obvious statement not because i want paying or suspect anyone else does, but just to try to highlight the fact that any time given to posting what were normally think of as helpful comments and information is done in the spirit of trying to assist.

 

If it doesn't come across like that then i apologise, but like a lot of other people who have posted a lot and for whatever reason have acquired some knowledge it really does help if people who want information or explanations try to post specific questions to which specific answers can be given.

 

Sorry for the rant, live long and prosper.

 

Glenn

[Mindzai]

Mindzai ..

 

i did find one problem with your spreadsheet, in that if i insert the sort code 05-02-12 on sheet 1, this actually returns the date! so i did it as 05 02 12 ...

 

Ooops Thanks for that, I will fix and update

[Glenn UK]

mindzai

 

i wanted to pm you about something i dont seem to be able to initiate a message any chance you can pm me please so i can respond?

 

cheers

 

glenn

[redsonja]

Thanks for your comments on the spreadsheets folks and your answer to my post Mindzai. As I said I will just continue to use Vamps. I am a dab hand with Excel (just wish I had it on my home PC) and i think deep down I would know I had done them right on Excel (nothing wrong with Vamps but just a confidence thing with me). Idea> I will treat myself to the Excel software when I get my 1st lot of fees refunded!

 

Anyhow what I would say is that anyone reading this thread who thinks they wont claim contractual are silly not to. It all worried me to start with and like a lot of people on here I became braindead trying to take so much in. I have finally got there in the end though and there is no way I will pay interest etc on charges that shouldnt have been levied in the 1st place!

 

Like most, I still worry if i have done it right (or will I be the 1st test case in court with the CCI) but people will clarify points with you on here so its best to work through it methodically and understand each bit at a time before you move on to the next bit.

 

Good luck

[Mindzai]

Thanks for your comments on the spreadsheets folks and your answer to my post Mindzai. As I said I will just continue to use Vamps. I am a dab hand with Excel (just wish I had it on my home PC) and i think deep down I would know I had done them right on Excel (nothing wrong with Vamps but just a confidence thing with me). Idea> I will treat myself to the Excel software when I get my 1st lot of fees refunded!

 

Anyhow what I would say is that anyone reading this thread who thinks they wont claim contractual are silly not to. It all worried me to start with and like a lot of people on here I became braindead trying to take so much in. I have finally got there in the end though and there is no way I will pay interest etc on charges that shouldnt have been levied in the 1st place!

 

Like most, I still worry if i have done it right (or will I be the 1st test case in court with the CCI) but people will clarify points with you on here so its best to work through it methodically and understand each bit at a time before you move on to the next bit.

 

Good luck

 

it is natural and healthy to question the output of the spreadsheets. If you've got the maths skills its always a good idea to test a few random formulas to ensure they tally.

 

However Vamp knows her stuff and all of sheets I'm aware of have been well-tested in terms of accuracy.

 

You might also like to try OpenOffice which includes Calc (amongst other tools), basically an Excel clone. It has pretty much all but the most advanced features of Excel, can read and write Excel sheets, and is completely 100% free.

 

OpenOffice.org: Home

[HowdyDoody]

Dear Bill et al

 

I have read and read and read again through all the information on interest, contractual compound or otherwise until I'm sick of it and have no clear understanding of ANYTHING!

 

Nothing that I have read here has clarified this matter and none of the spreadsheets make any sense. So you know what? I'm going to stick to my original claim of getting back all of the charges that the Co-Op Bank have levied against me.

 

I do know what I'm doing thank you and yes, I do deserve to get my money back! But if I start going into trying to charge interestother than the 8% at court claim stage then no, I don't know what I'm doing and my feeling is that I shouldn't bother.

 

And I know I'm not the only one on this whole site who's totally confused and fed up with this interest baloney ...

 

P:mad:

 

 

 

I'm with you paintball.

I'd like to thank everyone who has given me advice - but i also cannot get my head around this - not for lack of reading through things i hasten to add.

 

I think the rule of thumb should be - don't claim back the interest unless oyu know exactly what you're doing. My claim is quite small only £320 - so interest doesn't make a huge difference to me.

 

My BC claim will be significantly larger, i only hope that there is a nice simple way of calculating this before my Data Request comes back.

 

Highly Confusing!

 

HD

[Mindzai]

There is a very simple way of calculating it! Let a computer do it for you!

 

Use one of the spreadsheets mentioned in the last couple of pages of this thread, and you dont have to worry about the maths.

 

All you need to be able to do is type in the date you were charged and the amount, and it will do the rest for you.

 

if you get stuck, just post telling what the problem is and i guarentee it will be sorted

[Guest bong]

with respect, howdydoody and paintball, can I just say that you haven't said what it is that you don't understand. there has been a lot of help offered to you here, people have painstakingly tried to explain how to use the spreadsheets and the reasons behind claiming contractual interest. If you can use a spreadsheet to calculate county court interest then this isn't any harder. Is it that you don't know what rate to use or which spreadsheet to use? please clarify.

[redsonja]

wow Mindzai, thanks for that, had no idea that existed! Oh what joy to be able to use Excel. You are a tower of knowledge

 

Howdy & Paintball. You may be reading too much into the spreadsheets. I am new to all this too and thought I was missing something when it came to filling in the spreadsheets. I couldnt understand that the info you enter was quite that easy. I double checked my interpretation of the columns with Vampiress and I was correct. It really is a case of entering the information you are asked for and it really does work it all out for you.

[Delboy01]

Minor recap... Use Authourised interest rate or Unauthorised rate?

 

Can I get that figure from terms and conditions on Wooliches website?

 

Ta Guys / Gals

 

 

 

Edit Mindsai do I D/L the Prog on your sig and then choose a proramme out of it or what???

[HowdyDoody]

Hello,

 

I honestly meant no disrespect to anybody. I realise the time and effort that goes into all this.

 

The problem that i'm having is i don't know what interest rate to use as my account has varied it's rates over it's life, the overdraft limit has gone up and down like a yoyo, the information (my statements from my DAR) from Barclays does not list the interest rates charged.

 

Do you use authorised, or unauthorised?

 

The actual spreadsheet i don't think will be a problem - it's what rate(s) to use.

 

That particular problem doesn't seem to be explained anywhere (and i do apologise if i'm just being a bit dense or missing something obvious:eek: )

 

Thanks for the replies anyway guys....

[Guest bong]

you use the current interest rate(s) - they are on barclays website here Personal overdrafts rates & charges : Barclays Personal Banking

 

Claim the unauthorised rate, giving the authorised rate and then statutory rate as alternatives. Start high and they can only knock it down - whereas if you start low its not gonna be increased by the court.

[Delboy01]

Claim the unauthorised rate, giving the authorised rate and then statutory rate as alternatives.

 

Not quite sure what you mean here, Ive done Statutory 8% already

Do I do another one at Unauthorised rate and then another at Authorised and sumbmit all three???

 

Delboy

[Guest bong]

Minor recap... Use Authourised interest rate or Unauthorised rate?

 

Can I get that figure from terms and conditions on Wooliches website?

 

Ta Guys / Gals

 

 

 

Edit Mindsai do I D/L the Prog on your sig and then choose a proramme out of it or what???

 

couldn't link to the woolwich website - unauthorised is 27.5% EAR, authorised is 15.6% EAR (EAR equivalent annual rate)

[Guest bong]

Claim the unauthorised rate, giving the authorised rate and then statutory rate as alternatives.

 

Not quite sure what you mean here, Ive done Statutory 8% already

Do I do another one at Unauthorised rate and then another at Authorised and sumbmit all three???

 

Delboy

 

do spreadsheets for all 3 rates. in your particulars of claim say you are claiming the highest rate and give your reasons (ie mutuality & reciprocity) then say if the court doesn't approve that rate, you wish to claim the authorised rate based on same arguments then give your last choice for the statutory rate. yes provide copies of all 3 spreadsheets to back up your claim.