Why let your bank keep your money? Calculating your charges claim

[2Grumpy]

As overdraft interest is on the daily balance then I don't see how you can use a simple proportion to calculate the amount of interest that was charged on cumulative unfair charges & interest thereon without putting all of your daily balances into a spreadsheet. Plus that is no good if there is a higher rate of interest on the unauthorised portion of the overdraft. In that case, the excess interest would need to be taken from the higher figure first, then the lower figure.

 

I do agree that it is much easier to calculate when accumulated charges plus excess interest is greater than the overdraft limit!

 

I was putting this off for my son's account even though there are only 18 months transactions involved. I was thinking that the bank would do it for me, but the bank has said that they don't refund interest ... apparently they don't care if it was charged on something that they later refund no matter what the circumstances.

 

His bank refunded some direct debits that shouldn't have been taken. One of these took him over his limit .. you can guess the rest. The bank won't refund the charges until the test case is over. I say that it's nothing to do with the test case but it's like talking to a brick wall. Meanwhile his account is closed, no warning, no termination notice, no default notice, just closed.

[2Grumpy]

I looked at the spreadsheet but it's charging 8% statutory interest on all transactions.

 

It is probably a case of difficult to understand but when you do, it's relatively straightforward. I'm in the "do not understand" camp at the moment. I'm only interested at the interest proportion to reclaim when the total reclaimable charges is less than the overdraft limit at the moment - how to arrive at that.

[2Grumpy]

In any month where you are within the overdraft limit, where the cumulative charges & overcharged interest is greater than the overdraft balance, you should reclaim the whole of the interest charge that month.

 

I'm beginning to understand the spreadsheet.

 

You put the interest from the bank statement into column H & it calculates the amount to put into column B

 

I'm not sure why there is a "SUM" in the calculation though, and I still think that the calculation is too simplistic in terms of daily balances. I would have expected (SUM of daily cumulative charges) / (SUM of daily balances) through the charging period (not necessarily the month when the interest was applied to the account)

 

Having lit the blue touch paper I will be retiring the appropriate 20 yds (ok won't be around for a few days)

 

But I really do think that this calculation is flawed (although I hope I'm wrong, especially if people have started using it)

 

Presumably this is a modified charges reclaim spreadsheet

 

I really don't understand how you can apply the 8% interest to all transactions (unless you are only showing charges in there), that should only be applied to invalid charge transactions & be zero for the rest (have I lost the plot?)

[2Grumpy]

I'm also guessing that .022% per day is an accepted value for 8% p.a. simple interest rather than a more accurate figure of .021918

[2Grumpy]

Given a balance at some stage, you can work out the daily balance (backwards if necessary, then work forwards.

 

I can understand in that case that you would need to input all of your transactions. This makes it more important to download statements to spreadsheets whenever you can.

 

If you know the interest rate for charges, it must be possible to work out the interest on charges at any point - n days * daily rate * amount.

 

That might be better if there is a higher rate for unapproved overdrafts and in cases where the balance is unknown.

 

I'm still a bit unsure about the example claiming 8% interest on all transactions including those that aren't charges ...

 

Using proportions is OK where you know the balance and there is a single interest rate for approved & unapproved overdrafts.

[2Grumpy]

I've been trying to think of a simple way of calculating the amount of excess interest to claim for the period from when the first penalty charge is applied to when the entire overdraft is made up of unfair charges.

 

The exact way involves having all transactions available, then work out proportions each charging period.

 

One way of estimating the proportion of interest to reclaim each month is by using the proportion that the total charges are of the daily balances. That's not easy because one line on a statement can represent many days while several other lines represent one day. Also you might not have the balances (if you just have the transaction values from a SAR).

 

However, based on the unfair charges being applied reasonably evenly, an estimate of the interest charged on the total unfair charges would be half of the total interest charged for the period between when charges started to be applied at regular intervals and amounts and when the total charges always exceeds the overdraft.

 

For example, if charges of £100 were applied each month for 25 months before the total charges exceeded the overdraft balance and the interest charged for those 25 months was a total of £150, you could add £75 to the claim.

For charging periods where the total charges exceed the overdraft balance for the whole of the period, the whole of the interest for that period would be reclaimable

 

For those people who know the interest rate charged on their overdrafts (might be on the bank website) it's easy enough to work out the amount of interest charged on the total of unfair charges each month.

That's probably the best way to go for people without their balances (transaction details only from a SAR).

You would have to reclaim the amount charged when the amount calculated exceeded the amount charged (that's the point when the charges exceed the overdraft balance!)

 

Any comments?

[2Grumpy]

I've updated the spreadsheet that was posted in here to calculate reclaimable interest & statutory interest.

 

There are cells used for calculation that shouldn't be printed & formula that are only in the first few rows that need to be dragged down for all the rows

 

Account balance has to be entered whenever there is interest charged

 

Calculations take into account that interest is charged on previous months transactions

 

This is a draft & I would appreciate feedback!

Draft Int Calc3.xls

[2Grumpy]

here's a different version of ohoh4321's spreadsheet

 

It's for people who are entering data from a SAR and only have a list of charges & interest, no balances

 

It calculates the interest to reclaim, also statutory interest

 

It's a draft, so use carefully. Clear & extend the area with the formulae if you use it.

 

Charges & interest go in different columns

 

I calculate the balance from the interest charge & interest rate, or use a default rate if that's not known. It just has to be equal to or higher than the actual rate. It will handle rate changes (monthly or annual).

 

I use the previous months balance for apportioning the interest because that's what it's charged on

 

I work out when the full interest charge can be applied

 

Any feedback would be appreciated.

Draft Int Calc4.xls

Edited July 9, 2009 by 2Grumpy