Contractual interest?

[Glenn UK]

I used the sheet MINDZAI kindly prepared

 

Glenn

[chezt]

I used the sheet MINDZAI kindly prepared

 

Glenn

 

Thanks muchly Glenn ... I've tracked down & used the same spreadsheet & it's brill - I really like it!

 

I was having real problems with the Vampiress one as kept getting error mesages in cells even though I checked date format etc.

[sirowealot]

Glenn

 

Did you use MINDZAI's spreadsheet for a credit card claim? I noticed it specifically says not to be used for credit cards... what actual difference is there?

 

I'm definitely claiming for compounded contractual interest, but all my claims will be against credit card accounts rather than bank accounts and I'm a bit concerned that I'll be claiming for incorrect amounts.

 

SirOweALot

[Glenn UK]

Sir

 

yes i did, and no i dont know the difference between CC interest and Bank interest.

 

I will see if i can post a question for Vamps since he sheets say something similar I believe and she may know.

 

MBNA didn't complain much, as I have said a number of times before, if it comes to it, the issue wont be over the rate, it will be over whether the claimant has the right to claim contractual interest at all.

 

If you use contractual in your letters and it gets to a claim its odds on the defendant will simply say your not entitled to contractual interest, full stop.

 

So if they want to settle before court then they have to pay it, if they want to go into court then its a gamble since a judge may not see it our way.

 

JMHO

 

Glenn

[bram stoker]

http://www.consumeractiongroup.co.uk/forum/general/18313-why-no-one-claiming-14.html

[bill-k]

I would go further and argue that in fact there is no logical choice but to claim the unauthorised rate (for banks) or the cash advance rate (for cc companies).

 

Arguably the link between the cash advance rate and unlawful borrowing by the defendant is quite weak but I'm not sure there is anything better in CC Terms and conditions.

 

If anyone has a better logic for CC companies id be interested to hear it.

 

JMHO

 

Glenn

 

OK., Glenn - you asked for it !! Brace yourself !!

 

This may not be better logic, but it's mine, anyway, FWIW. As I understand it from the info published by a couple of banks (shown below), and from other BAG posts:-

 

Neither the APR nor the EAR rates are the annual rates actually used to directly calculate compound interest with. Unless the interest is simple, or is compounded annually (or longer), then the EAR or APR is higher than the actual annual rate used.

AER:-

For a given amount (the Principal), of £100, interest at an annual rate of 20.00% compounded daily will amount to £22.13 after one year. The EAR rate is the interest added after one year, expressed as a percentage of the Principal amount. So the EAR in this example would be 22.13%. If, however, the interest rate being applied was 20.00% simple (or 20.00% compounded annually), then the total interest added would be £20.00 and the EAR would then be 20.00%.

APR:-

Normal Credit Card purchases - The same would apply to a credit card purchase of £100. Interest at an annual rate of 20.00% compounded daily will amount to £22.13 after one year. The APR rate will then be 22.13%.

Cash Advances:- The difference between EAR and APR occurs when there are certain additional "one-off" charges made in relation to the amount in question, and the initial cash advance fee is one such charge. For a Cash Advance of £100, incurring a one-off fee of £2.00, the annual interest rate of 20.00% compounded daily REMAINS THE SAME. However, the Principal amount (for the purpose of calculating compound interest) becomes £102.00, so the interest at an annual rate of 20.00% compounded daily will amount to £22.58 after one year. The total cost of borrowing that £100 over the first year will have been the £2.00 fee, plus the interest of £22.58 = Total of £24.58. so the APR rate in this case will be 24.58%.

Thus in my understanding, there is NO higher or lower (as in "unauthorised or authorised") rate of annual interest actually being applied to credit card borrowing - just one single annual rate. The apparent difference in rates is only existent in the APR rates, and is purely the result of the mechanics involved in adding the fee to the Principal amount, and not applying a higher rate.

If you apply the standard formula for calculating compound interest to the EAR or APR rates, you will technically get the WRONG ANSWER. If you do the same, using the APR for cash advances, then you will be EVEN MORE WRONG. For £100 claimed 6 years ago, then, the Court could theoretically then say "Bill-k - you HAD £332.08.....you've just LOST £232.08 !!

Having said that, the difference between calculating the interest using the actual annual rate applied, and the AER is fairly small. And I have previously conceded to Vamp that this is perhaps one technicality too many, and can be reasonably expected to be beyond the understanding of the average account holder. Anyway, the banks designed it that way, didn't they ?

Is anybody still with me on this - or have you now joined the Woolwich ? !!

Whilst we can claim contractual reciprocity with regard to the interest rate, I am not so sure that we can do so with the "one-off" cash advance fee - and if we could, then how could we apply it? How often, and when ? Maybe we can safely add their standard cash advance fee to each and every charge, but maybe that is being just a bit TOO "reciprocal" ...!!...? Another can of worms ??

I stress this is just MY understanding of interest rates, and the difference between CC's & current accounts interest rates & methods. If you have understood it, too, then welcome to my funny-farm !!

 

 

Qouting published Bank info I found online:-

Smile:-

GROSS

Gross means the contractual rate of interest payable before the deduction of income tax at the rate specified by law.

AER

AER is the notional rate which illustrates the contractual interest rate as if paid and compounded on an annual basis.

APR

APR is the total charge for credit in line with regulations under the Consumer Credit Act 1974 and is used across the whole UK financial industry on the basis it allows you to compare the cost of different forms of credit (such as loans and credit cards). When an APR is calculated, certain fees and charges are taken into account.

EAR

EAR is the equivalent annual rate taking into account the interest rate and how often interest is paid but excludes any fees or charges.

 

Intelligent Finance:-

Current Account

Item EAR* AER**/Gross Gross Monthly Interest Net Monthly Interest

Credit Balance 2.75% 2.72% 2.17%

Authorised overdraft 9.80%

Unauthorised overdraft # 25.00%

 

# If, without our agreement your current account goes overdrawn or you go over your overdraft limit, we will charge you interest on the amount you are overdrawn or the amount that is in excess of your agreed limit at our unauthorised overdraft rate.

* EAR is the Equivalent Annual Rate. If we agree to let you have an overdraft, we will decide your overdraft limit and tell you what it is. Overdrafts are repayable on demand.

** AER stands for Annual Equivalent Rate and illustrates what the interest would be if interest was paid and compounded each year. The gross rate of interest payable before the deduction of income tax at the rate specified by law is the contractual rate specified by law. The net rate is the rate of interest payable after allowing for the deduction of income tax at the specified rate (currently 20%).

[bram stoker]

Without reading this too much, a quick question... Are you lot claiming cash advance fees?

[rob14973]

Good point as i have just worked out my claim of charges with retail interest only and not cash advance. Should i put this in anybody know?

[bram stoker]

No no. My point is I'm worried if you are as this is a service charge not a penalty charge.

 

Sorry if I wasn't clear.

[chezt]

I was having real problems with the Vampiress one as kept getting error mesages in cells even though I checked date format etc.

 

I've tried again today & it works lovely now!?!?!?! Dunno what Vampiress has been up to but it's all good & much appreciated!

 

I've re-entered my claim details on the compound contractual interest spreadsheet & my figures have changed from £340+£36.19 actual interest on charges having an additional £199.92 in compounded interest - does anyone know if this sounds about right???

[chezt]

Whoops - forgot to add I've used 28% as the interest rate as a test as I'm tryna track down the actual rate at the mo ....!

[bram stoker]

Which bank Chetz? Glad Google worked out for you in the end. I do keep them updated, but they can sometimes be odd to use.

[chezt]

Which bank Chetz? Glad Google worked out for you in the end. I do keep them updated, but they can sometimes be odd to use.

 

Hi there - ta for quick reply! It is working great now - looking at the other threads someone else was having same prob but I can't remember who now ....

 

Anyway, it's Yorkshire bank Visacard - States 1.385% per month (Purchases) on my monthly statement if that helps ...?

[bram stoker]

http://www.consumeractiongroup.co.uk/forum/general/6964-spreadsheet-interest-33.html#post321818

IWas this it? Maybe you could help him if you know what you did to get it sorted.

[bram stoker]

Funny, I google Yorkshire bank visa, and I get links to this site - cool!!

[bill-k]

Without reading this too much, a quick question... Are you lot claiming cash advance fees?

 

Sorry about "War & Peace" Vamp - No, I was explaining my understanding of APR rates. If you claim the higher credit card APR rate (for cash advances) as contractual, then you might be in danger of accidentally doing just that, and it might get your contractual rate thrown out.

[chezt]

http://www.consumeractiongroup.co.uk/forum/general/6964-spreadsheet-interest-33.html#post321818

IWas this it? Maybe you could help him if you know what you did to get it sorted.

 

Think that was one of them & I have done a short reply but I have seen another where they were getting a message with 'VALUE' in the cell - anyway, I haven't done anything different - just started another fresh sheet today with the same info & all hunky dory! Don't know what has happened as I have done this several times since last weekend & they all failed ... could it be something to do with your recent updates/changes in your chambers?

[chezt]

Funny, I google Yorkshire bank visa, and I get links to this site - cool!!

 

Presumably that's because there is a thread of that name in the YB forum?!

 

Don't spose u found the rate I need ... *asks hopefully!*

[bram stoker]

Presumably that's because there is a thread of that name in the YB forum?!

 

Don't spose u found the rate I need ... *asks hopefully!*

I haven't, but am told it might be a Clydsedale card now? Does that make sense?

 

Google spreadsheets are odd to use. For each calculation you need to enter every bit of info relating to that calculation before it stops showing an error message. Folk can export it to excel if they prefer.

[chezt]

I've seen other threads mentioning Clydesdale with a Glasgow address but it means nothing to me - All my statements are from Leeds and only mention Yorkshire Bank.

 

Hey hang on in small print on the bottom of a letter I've just had it says Yorkshire Bank is a trading name of Clydesdale Bank PLC!

 

Thanks for that!

 

As for the spread sheet I don't know what was wrong but I tried entering a few lines then clearing the rest of info below to see if that was the problem but it didn't work ..!? I tried all sorts over about a week - strange eh?

 

Anyway - it works now & is super so thats all that matters - thanks again

[Glenn UK]

Sorry about "War & Peace" Vamp - No, I was explaining my understanding of APR rates. If you claim the higher credit card APR rate (for cash advances) as contractual, then you might be in danger of accidentally doing just that, and it might get your contractual rate thrown out.

 

Bill

 

Thanks for 'war and peace' must say Tolstoy would have been proud of you

 

Seriously though it was really useful, perhaps i should put it this way then when i talk about the concept of claiming contractual interest for CC, that in principle the cash advance rate is the most appropriate in my view.

 

I am not certain I get the full implications but are you highlighting the fact that if one simply took the published cash advance rate (an APR) an applied it to your charges that you would under or over claim?

 

If its under then as much as it would be galling I don't see that as a problem, if its over then clearly its not ideal.

 

If it does give a value larger than the claimant should be claiming then what does one apply and how does one determine that rate?

 

I should add that the argument will primarily not be about the rate per se, it will initially at least be about whether you can claim it at all, contractual interest that is.

 

The actual rate of interest will only be considered once the court has declared you're entitled to it and if we have over estimated and that is challenged then of course there is an issue.

 

As a lay person i think most litigants in person would not be castigated too much, if the defendant says its wrong and the claimant sticks to their point in good faith the defendant will have to say why its wrong in order to win the point.

 

since the claims ask for the contractual rate or other such rate as the court deems appropriate if it determines that contractual rate is appropriate then i wonder if it would simply award it at the appropriate rate?

 

Interesting issue though. The MBNA paid what i termed contractual interest on my claim based on their cash advance rate.

 

JMHO

 

Glenn

 

PS Bill i nearly clicked on your scales but couldnt be bothered to go all the way back!!!!

[bill-k]

Glenn - I'll split my post into sections in future to make scale-clicking easier and get some free clicks as well (Compound clicking !) TBH., I have never clicked anybody's, as I have only just realised what they're for !! I ought to go back and and rattle yours a few times. I recall one of the ladies saying she could click yours all day, lucky lad !!

 

As we seem to agree, it might be that we're being more precise than we need to be, as claimants in person, but there is a possibility in my mind that a bank could say that applying the cash advance APR is not strictly contractual. This being that the rate ACTUALLY USED to actually calculate the interest on both normal purchases AND ca's is one and the same. The EAR and APR rates are there for marketing purposes only, to enable us thick gits to compare between credit or service providers. These rates are BASED on the actual rates the banks use, but are NOT themselves used in calculating our interest.

 

If you use the EAR or APR rates, then these will give a slightly higher rate than you are contractually entitled to. If you use the ca APR rate, then it will be even higher, because it contains the additional element of the one-off ca fee. To apply this fee as part of your compound interest rate is incorrect, and they might be able to say that you are not correctly arguing for the contractual rate, and get you bumped down to s.69.

 

If you use the lower (normal purchases) rate of APR, then - although it is technically incorrect - they will hopefully leave it be, as your earlier payout seems to imply.

 

...But we shouldn't leave it to hope, should we ?

 

Dammit, I've motor-mouthed again - I can't see the top !!

[roydosan]

Be careful about the cash advance rate - for my MBNA card it is exactly the same as the normal rate.

[bill-k]

....I've just been back to my User Control Panel, and realised how the scale-clicks work. Thanks for yours, Glenn. Until now, I thought it was Mods awarding reputation points !!

 

What do I do with my points - can I redeem them for a wee free giftie or something ?? I've probably got just about enough for a little calculator/clock/radio/bottle opener or summat !!!

[bill-k]

Be careful about the cash advance rate - for my MBNA card it is exactly the same as the normal rate.

It would seem from that, that MBNA don't charge a "one-off" fee for cash advances, then - is that right ?

 

If so, I don't know how long that has been for (closed mine last year), but it is perhaps another sign that they are realising how vulnerable these charges and penalties are, and slowly wrapping everything up in their interest rates - and out of reach.

 

Now here's a thought - If they are going to be raising their rates over the next few months to compensate for losing their penalty charges. Is it not worth considering delaying our Contractual Interest claims until later, so we can quote their new higher rates ?

 

...Or is that being just a bit naughty.

 

...Then again, who can accuse us of that anyway - the accused ?? :grin: