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Why 0.00022 on Interest


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Help please...

 

I have read all FAQ's, and looked through plenty of this forum, but....

 

Why is the daily rate of interest calculated specifically @ 0.00022%, why this figure (it details this figure in the FAQ's but no reason why 0.00022 is used specifically).

 

Moneyclaim online details the following :

 

 

A. If you are claiming interest under section 69 of the county courts act 1984 you must multiply the amount you are claiming by 8% and then divide this by 365. This gives you the daily rate of interest. You must then work out how many days have passed since the date the invoice was due until the date the claim is issued. Not only must this be stated in the particulars of claim, but this figure must also be added to the amount you are claiming.

 

Example for Moneyclaim calc

Charge £30*8%/365=0.006575342*2211(Days passed) = 14.53808219 i.e. Claiming £14.54 on this charge.

 

Example for ConsumerActionGroup

Charge £30*0.00022*2211(Days passed) = 14.5926 i.e. Claiming £14.59 on this charge.

 

As you can see the amounts claiming for interest are £14.54 and £14.59 respectively, these are different amounts, and if you need to justify how you have calculated these amounts - then what/why is the justification for using a figure of 0.00022% ?

 

Thanks.

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Gary,

 

Your problem stems from rounding up!

 

The actual rate is 8% APR. When you divide this by 365 you get 0.021917808219178082191780821917808%

 

Now to make things easier, this is quoted as 0.022%.

 

If you are using a speadsheet to work out the calcs, the value will be lower, but if you work out with a calculator for example, and you round UP to 0.022% you will get a higher figure.

 

I think as long as you use the same method for all your calculations, no-one is going to argue if you round up such a small fraction of a %.

 

Cheers

 

Boba :cool:

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Gary,

 

Another point to consider, I noticed a paragraph on the NI courts website about small claims which states that a standard rate of 8% may be claimed, unless another rate of interest applies.

 

At present, interest is calculated at 8% per year. This rate is used unless the claim arises from a contract which specified an alternative rate. You must enter an amount within the interest field and then detail the interest amount, rate and period within the claim description field.
http://www.courtsni.gov.uk/NR/rdonly...SCOL_guide.doc (page 11)

 

There is alo a guidance by OFT (Link somewhere in these threads)

 

 

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.

Therefore, in court, if you can show details of the banks Unauthorised Overdraft EAR you can use the same rate for your claim - typically between 15% - 35%!

 

 

Good luck!:cool:

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Ah Boba I see now.

 

I just didn't realise it's 8%/365, and I was getting confused that 0.00022 is 0.022%, I feel like a bit of an idiot now.

 

Thanks very much, if my bank asks me for a justification of the amount of interest I have calculated, then I can now do that.

 

Thanks again

 

Gary

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You shouldn't be adding the 8% at a point where the bank can question it. It should be omitted from your initial correspondances with the bank.

 

It is a statutory interest rate that is added at the Judges discretion AFTER judgement. It should be added to the sheets when you go to MCOL/N1.

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