Interest Calculation

[Seminole]

In estimating the interest due on the charges, should this be compounded? The spreadsheet in the Library section calculates interest at a simple daily rate (ie charge x daily interest rate (8% divided by the number of days since the charge arose). Surely there should be an element of interest on interest here as the debt builds up.

 

For example a £25 charge arising on 4 December 2002 would attract interest of £6.41 on a simple daily rate basis but £7.27 if compounded. Is this a pecularity of the statutory interest system or an opportunity to recover additional costs?

[Seminole]

Darnit. I always thought that an APR was a compounded rate.

[jody0524]

Hi I am a bit confused with this 8%. I have lots of direct debit charges for £35.00 do i work out 8% on this figure?

 

Thanks

 

Jody

[Glenn UK]

Jody

 

Depends is the answer.

 

8% is the rate of interest which can be awarded by the courts its calculated on a simple basis from the date the charge uccored until the time its repaid.

 

However, you would have abetter claim if you use contractual interest which is applied before getting to court and is based on the rates of interest a bank or CC company would have charged you should you have had their money for that length of time.

 

Oh and its compounded too, so as Seminole said, interest on interest.

 

HTH

 

Glenn

[LEECHTHEBREACH]

I think Glenn uk you are a little wrong here.You are quite within your rights to apply contractual interest rates .It is based on an implied term in the bank contract which is based on "mutuality and reciprocity" ie what is sauce for the goose is sauce for the gander, ie if they are charging you 0.79 (say) per % per month,then that is what you are going to charge them. This by the way is NOT compound interest.Contractual interest is if in Oct 2000 you had a penalty for £25 then to this day it would be 0.79% x72 months=£13.82.The Compound interest clicks in because as from Oct 2000 every month that small part of the contractual interest kicks in it is raising you overdraft level and turning it or Compounding it.So there are two types of interests that are applying at the same time.This really does push the interest up a massive amount .I am about to try this against Barclays but i will have to send another LBA.This a major issue and needs to be addressed properly.

 

If you think this helps click the scales!!

[jody0524]

Hi thank you to you both for your reply, but i dont understand still, im sorry its just not an area i know much about. Basically i have had £830 of charges in the last year, so how do i work it out on this amount. Would i lose a lot of money if i didnt claim for the interest?

 

I am in the early stages and prepearing my preliminary letter still.

 

Thanks

 

Jody

[LEECHTHEBREACH]

You would loose a load asi have previouly said.You should look at your statement

and see how much they are charging you a month,this may vary .If it is say (as mine is)

0.79% per month then £35 x 0.79% x 12 months would be £3.32,put this in a seperate column and add the total.I did my own spread sheet viz;

04/12/00 charge for item returned unpaid £25 interest 0.79% pm x70=£13.82

21/12/00 charge for unauthorised overdraft £20 " " pmx69=£9.66

etc

etc to the present day Total charges here Total interest here

 

Grand Total: add charges + interest=figure here

 

Flopin easy but takes ages(buy a calculator!),its your money remember

 

If it helps click the scales

[tim2718281]

Basically i have had £830 of charges in the last year, so how do i work it out on this amount. Would i lose a lot of money if i didnt claim for the interest?

It depends on the interest rate, and how long ago the charges were taken.

 

From what you've said, I'd expect the amount of interest to be in the region of £50 to £150.

 

The forum spreadsheets will calculate ot for you.

 

Tim

[Glenn UK]

I think Glenn uk you are a little wrong here.You are quite within your rights to apply contractual interest rates . I said that too. It is based on an implied term in the bank contract which is based on "mutuality and reciprocity" ie what is sauce for the goose is sauce for the gander, ie if they are charging you 0.79 (say) per % per month,then that is what you are going to charge them.

This by the way is NOT compound interest. Contractual interest is if in Oct 2000 you had a penalty for £25 then to this day it would be 0.79% x72 months=£13.82.The Compound interest clicks in because as from Oct 2000 every month that small part of the contractual interest kicks in it is raising you overdraft level and turning it or Compounding it. I dont agree with your interpretation/explanation. The contractual interest is charged on the basis of applying a rate to the intial stake at the initial time period, typically monthly, then the following month applying interest to the total of the previous months stake plus interest.

So there are two types of interests that are applying at the same time. I dont see this, the method is the compounding of the interest and the rate is another element, i dont see how it can be explained as 'two types of interest'?

This really does push the interest up a massive amount .I am about to try this against Barclays but i will have to send another LBA.This a major issue and needs to be addressed properly.

 

If you think this helps click the scales!!

 

This isnt new there has been a lot of discussion about this idea/appraoch and its already being tried by many people, myself inlcuded. If you wish you can get the spreadsheets produced either by Vampiress or Mindzai which work out the interest based on the contractual approach whihc is compound interest at the relevant rate.

 

HTH

 

Glenn

[Glenn UK]

Hi thank you to you both for your reply, but i don't understand still, I'm sorry its just not an area i know much about. Basically i have had £830 of charges in the last year, so how do i work it out on this amount. Would i lose a lot of money if i didn't claim for the interest?

 

I am in the early stages and preparing my preliminary letter still.

 

Thanks

 

Jody

 

Jody

 

There are some simple ways for you to see the affects of claiming interest using different methods.

 

If you go to the templates library i think Vampiress has uploaded some spreadsheets which will work out the Sec 69 interest for you at the 8% maximum allowed.

 

Then if you find a post by VAMPIRESS she has a link in her signature where you can get spreadsheets which will compound the interest for you at the chosen rate. MINDZAI also has a spreadsheet which can be obtained from a link in his signature and does the same.

 

Clearly with any addition of interest based on a time period means that the longer ago that the charge was incurred the more interest will be due to you, however, because when you compound interest you effectively charge interest on interest as well as the charge the final value can be significantly larger than the initial stake.

 

HTH

 

Glenn

[karens25]

hi

i thought i was ok with the interest, im about to submit a claim using mcol but i was thrown when i found out i could claim 8% per year.. ive filled in the spreadsheet so i have the daily rate.. ( i think!) but how do i work out 8% per year on £332 over 5 yrs?

please...

thank you k

[Glenn UK]

Karen

 

use on of the spreadsheets from the template library, it will work out how much interest is owed by the banks and work out how much a day it is too.

 

HTH

 

Glenn

[karens25]

cheers glen

ive already filled in the spreadsheet so that can be submitted now, thought it must be easier than i was making it!

thanks again

karen

[LEECHTHEBREACH]

332 X 8% =26.56 x5=132.80

[jody0524]

Hi Glen & LEECHTHEBREACH,

 

I will attempt to fill in the spreadsheet now, thanks for your advice.

 

Jody

[LEECHTHEBREACH]

Seminole you are so mixed up i cannot believe you.The 8% you are putting on for the court is only when you have worked out your total claim with the charges (contractual or otherwise)with the interest shown,for your pre letter or LBA

Otherwise you would,nt need the flopin spreadsheets!!!

[mandarin1980]

Hi ya,

 

(sorry to tag on to this thread but Imported, you cannot receive any more private messages since your inbox space is full - FYI)

 

Anyway... Please can you tell me how to up date my interst spreadsheet.

 

I filled it out a while ago, and as I'm about to send my Letter Before Action letter I want to up date it. I'm good with excel but these formulars are way above my head!

 

Many thanks

Manda

[oldtyke]

Does anyone know if I am able to claim back "overdraft usage fee" ? I have no overdraft in place. Thanks.

 

 

Regards,

[Glenn UK]

Manda

 

Change the date for todays date in the spreadsheet and it updates the values assuming youve used one of theones provided by memebrs of this site.

 

Not sure Oldtyke, are you saying you have been charged for an overdraft you dont have?

 

Have charges pushed you into overdraft?

 

Glenn

 

PS best to start your own threads and post everything there.

[Dimebag]

Hiya - is there a basic formula for calculating the interest owed to us by the banks?

 

The spreadsheet (top post) I downloaded didn't have a formula, but I've since found another sheet and formula on this site...

 

It's saying that you calculate at 0.0022 for each day the charge has been applied to your account - is this correct? Or have I put too many zeroes in there?

 

Thanks alot, Vicki

[breadline]

you can test 1 result

 

take your recent charge x the days since taken, divide 365 ,divide by100,x8.

 

( 365 days in a year)

(100 to get the 1 percent)

(X8 to get the 8 percent)

 

should give you the same percentage as the interest column.

 

 

BL:)

[Dimebag]

Excellent, thank you so much for your reply - looks like it's right after all

 

Not as much as we were hoping for, but anything's better than a smack in the face with a wet fish

 

Thanks again for getting back to me - much appreciated - you guys are doing a brilliant job on here - thanks to everyone!

 

Vic & Mark

[Glenn UK]

Excellent, thank you so much for your reply - looks like it's right after all

 

Not as much as we were hoping for, but anythings better than a smack in the face with a wet fish

 

Thanks again for getting back to me - much appreciated - you guys are doing a brilliant job on here - thanks to everyone!

 

Vic & Mark

 

You have the choice of whether to claim for the CCA interest of the contractual rate.

 

Basically if you use the contractual rate then you use the unauthorised overdraft rate and compound the interest from the day the charge was opposed until the day its settled.

 

Vampiress has a sheet that will do this for you and also a member. MINDZAI has too.

 

You might find the results of using those rates and method a little more agreeable.

 

when you submit the claim to court you put the rate you wish to claim or in the alternative Sec 69 at 8%

 

HTH

 

Glenn

[LEECHTHEBREACH]

Vickie,goto Dedicated free file hosting upload storage space - CompoundSheet_v1.5.xls

and download the spread sheets.This works very well with Excel or Open Office.org.

I incidently was not able to download Vampiress,s,weird.

Like everything like this it looks complicated,but it is not.Read the instructions and print them off,goto preview print first otherwise you will be printing 20 pages!! Put in the % your bank are charging you a month,(at the start of your particulars,before the spread sheet starts)this will be at the bottom of your bank statements at the end of each month with your charges.If this varies over a period of time you will have to take the average % because you cannot change it halfway through,otherwise you will have to

list the charges at a ? %,carry them on to the present day, print them off,and start again every time your % changes and this will take a long time,(an almost impossible task to do unless you can cut and paste them back in when you start again,but you can,t)Over say a 6 year period this is likely to take you 4-6 hours to complete.Do not forget to print off the compounded interest sheet as well,(this is very important) because this is what you need (both sheets),to send with your particulars of claim.If you have sent off your pre lim letter or LBA,do not fret as you will just have to send an amended LBA.At the court stage do not add on 8% because you have already used the Compound Interest to cover that.Do not do your self out of this interest,it is your money.If it is contested you just argue "mutuality and reciprocity",

Put below in your letters and county court claim.

I calculate that you have applied £xxx.xx in levies and further, I also claim interest at a rate of ?% as set out in the attached list of charges. I believe this rate to be justified under the principle of "mutuality and reciprocity", and is based on your monthly overdraft interest rate that is applied under the terms of the above mentioned account.

Your monthly interest rate started in Oct 2000 as (my figures Barclays) 2.2% unauthorised,1.45% authorised,dropping gradually over the following 4 years to 2.05% unauthorised and 0.79% authorised,so i am taking 1.25% as an average (this for the compounded part). Therefore the total amount owed as of today’s date is £xxx.xx.

There are sheets available on this site for credit cards etc.

 

This should cover every thing to do with this operation,(i know interest is confusing to begin with) so will a site helper post this reply at the top of the interest thread and keep it there,so that it helps everyone !!!

 

 

If you think this helps,click the scales !!!!!!!!!!!

[Glenn UK]

FWIW

 

I am not sure if the interest rate is or was always quoted on bank statements, I personally wouldn't bother to work out the various rates charged over time. I would and have applied the current rate as advertised.

 

The issue with claiming back contractual rates is not the actual rate per se, its the principle of using the contractual terms which the banks intended to impose on the customer without having the customer impose them back on the bank.

 

If it doesn't get to court then stick with the maximum contractual rate available to you now and if the bank or cc company wants to prevent you from going to court then thats what they have to pay.

 

If it gets to court then its possible that the court will determine what you can claim and it may or may not as it sees fit award you contractual interest at a rate of their choosing.

 

notwithstanding the direction of the court they will only award what you have asked for or a reduced amount.

 

If you ask for less than they might have otherwise awarded thats tough.

 

JMHO

 

Glenn