A New Way of Looking at Interest- 1st successful Claim - N'wide

[caro]

To refer once again to BF's post:

 

 

 

It seems that there is continous repetition and warning about claiming contractual interest in this thread, but after 15 pages comparitively little fact and figure about actually doing so. That's not to say there has been none, but I think the point about treading carefully has been made over and over, I think it would be more helpful at this stage to start coming up with some real solid help for those considering to go this route.

 

I'd suggest that if BF is posting things such as what I've quoted above that either he is correct, in which case it would be nice to get some further input, or the people repeadedly expressing the need for extreme caution are correct. Either way as staff members seem to be taking drastically different viewpoints, and it is staff members who users will tend to naturally heed most, maybe there should be some kind of discussion amongst yourselves before posting threads like this, especially when they are then backed away from by the OP.

 

I'm not saying we shouldn't be careful, but now that point has been made perhaps we could move on to more constructive areas rather than just repeating it ad nauseum?

 

Firstly there are no staff members, we are all volunteers with our own views which we have as much right to express as you have to express yours. There are very few facts and figures because there are none available. Despite the size of membership and the forum generally, this site is still in its infancy, and is about empowering people to help themselves. You need to do your own research to find cases of people taking this route, and how they have progressed. If you and people like you wish to take that route the decision is yours, and when you have done so perhaps you would be kind enough to feed back to us how you get on. When that has happened sufficiently then we will all feel more comfortable that it will be safe to proceed with contractual interest. You rightly point out that BankFodder has given his opinion on this, but much of the last few pages has been about compound interest, and that is different again.

 

Glenn, I cannot advise on Mercantile Courts I am afraid, but if you do a search using the work mercantile I am sure you will find some information, but Google will provide much more.

[Mindzai]

Mindzai

 

I can see your point, about moving on, the most recent posts have been factual about the courts and at least one case that has gone to mercantile court.

 

FWIW the need for understanding is not related per se to contractual interest, its about the process generally.

 

I have only been coming on this site for a relativley short time, but the numbers of people asking for help when this or that has happened because they havent done any reading seems to be increasing.

 

I only hope that peoples claims go through smoothly and understand that there are risks.

 

Im sorry if you feel this is detracting from the thread, it seems to me to be entirely pertinent that someone should say watch out there are sharks in the water, occaisionally

 

Points taken, I don't think these warning are detracting from the thread, and I don't mean to criticise them because they are important and necessary, I just mean that having made them, we should now start researching and exploring the process iteself like you say. We need to start backing up what we are doing or thinking of doing some some legal fact imo.

 

Firstly there are no staff members

 

The term 'staff members' is often used to describe the voluneers who 'staff' forums, ie mods and admins. As for rights to express your own views, yes of course you have, but you also have certain responsibilties towards members who may trust what you say due to the position you are in.

 

There are very few facts and figures because there are none available.

 

If this were true, (which it clearly isn't imo - there must be laws and practices governing contractual interest), then is it right to be posting threads encouraging people to claim contractual interest in the first place? Expecially when they are posted by someone in BandFodder's position where he is likely to be taken at his word. He doesn't say anywhere that his post is his opinion, and this is certainly not the impression I got from his thread entitled 'Why is nobody claiming the contractual rate of interest'! that to me sounds like someone encouraging others to act!

 

You rightly point out that BankFodder has given his opinion on this, but much of the last few pages has been about compound interest, and that is different again.

 

Not really, compound interest is an inherent part of claiming contractual interest in the context of this forum.

 

My point is, if threads like this and others are going to be posted by high profile members, they should be backed up. Of course that doesn't mean BF should necessarily be the one to back up his OP (although it would be helpful if he did imo), but we should at least be trying to sort out between us what they best way to go about it is. We've covered one aspect, contractual interest, at great length, but I don't think we should stop there. We need to keep getting together the facts and legalities on this. You say people should help themselves research it but then you say that there is nothing available to research and nstead just advise caution! I think it would be much more useful if we helped each other hammer out a firm legal basis for claiming contractual interest so that it ISNT such a risky procedure.

 

To that end, this post courtesy of zootscoot has some very helpful factual starting points to be considered.

[jb79]

Assuming a flat distribution the charges a 25.121% interest rate would double the claim where as a 8% rate will only cost 22.96% of the total charges. In effect by using the contractural rates which are in most instances more than threshold above the banks would in effect be paying back double the amount they have declared as revenue from bank charges.

 

There is a significant vested interest of promoting the alternative view.

 

This issue is a very significant part of the whole compensation issue.

 

People will have found that over time their financial situation has improves as they command increased incomes and that the majority of their charges are in the earlier years available to them so this figure may be infact even greater.

 

If you told you boss you lost £100 one day then went back and said actually it was £250 the next day what do you think their reaction would be.

[caro]

Expecially when they are posted by someone in BandFodder's position where he is likely to be taken at his word. He doesn't say anywhere that his post is his opinion, and this is certainly not the impression I got from his thread entitled 'Why is nobody claiming the contractual rate of interest'! that to me sounds like someone encouraging others to act![/quote=Mindzai]

 

This is BankFodders signature which appears on all of his posts.

 

 

Advice & opinions of BankFodder, The Consumer Action Group and The Bank Action Group are offered informally, without prejudice & without liability. Use your own judgment. Seek advice of a qualified insured professional if you have any doubts.

 

Not really, compound interest is an inherent part of claiming contractual interest in the context of this forum.

 

My understanding is that compound and contractual interest are different, hence the warnings for caution.

 

We need to keep getting together the facts and legalities on this.

 

We are and any contributions you wish to make to this process would be greatly appreciated.

 

 

You say people should help themselves research it but then you say that there is nothing available to research

.

 

I said that there were no facts and figures available, by which I meant on this site, and was suggesting that you search the forums for threads where people are claiming contractual interest and see how they have got on. I am sorry if this was not clear.

 

I think it would be much more useful if we helped each other hammer out a firm legal basis for claiming contractual interest so that it ISNT such a risky procedure.

 

We are all trying to help each other as far as I am concerned, each in our own way, but there are many pressures on everyones time, and many more issues than this to take into consideration. Much of BankFodders time is spent helping many of the 60,000 + members once they reach the court stages, and particularly when their cases deviate from the norm, and they encounter problems. I hope that you will find this from BankFodder helpful and will take heed of what he says.

http://www.consumeractiongroup.co.uk/forum/litigation-progress/announcement-center-bankfodder-very-sick.html

 

Having tried to get my point across ad nauseum on this thread I will leave you to carry on as you see fit, and wish you well with your claims.

[Mindzai]

Ok well moving on then...

 

http://www.consumeractiongroup.co.uk/forum/general/28857-contractual-interest-banks-paying.html#post225802

 

Zoot's post above mentions an argument that could be useful and has legal basis - that is if the bank's T&Cs don't explicitly mention that the interest is to be payed by US to THEM, then we have grounds for the contract working both ways. That seems like a reasonable argument to me. I know from having checked Lloyd's T&C's that this is definitely the case for them.

[roffeyintl]

Just to add to this thread - I have (yesterday) issued a claim against nationwide for charges plus interest, plus their own rate of interest for unauthorised borrowing 24.9%. 8% is the court rate. Our contract is not with the court - its with the bank - reciprocity - Ceteris paribus - They should be prepared to pay and equivalent of their OWN charges for their own unauthorised borrowing.

Watch this space

[meagain]

that is if the bank's T&Cs don't explicitly mention that the interest is to be payed by US to THEM, then we have grounds for the contract working both ways.

 

It is highly likely that none of them will specifically say this, since that would cause a "significant imbalance" in the contract, and thus not be valid terms.

[Glenn UK]

. 8% is the court rate. Our contract is not with the court

 

Im not sure what your point is here, I am wondering if you realise that the sec 69 interest is primarily for claims where no contractual rate exists.

 

There is of course interest rates associated with our contracts though.

 

Howevewr, should an individual decide not to claim contractual they always have the option of claiming sec 69

 

HTH

 

Glenn

[Mindzai]

Sorry. Posted as Mindzai by mistake. Lucid.:o

[lucid]

I know that we are trying to move on to discussing the legalities on claiming contractual interest, but I feel that it is really important to make this clear.

 

My understanding is that compound and contractual interest are different, hence the warnings for caution.

I think it's really important to point out that in the context of this forum they are not different (which is what Mindzai was trying to point out). Compound interest is the form of contractual interest present in your agreement with the bank. With reference to p33 of Small Claims Procedure by Judge Patricia Pearl it says that contractual interest "applies if it was in the original agreement between the claimant and defendant."

 

If you were to state in your claim that you are claiming contractual interest but you are calculating it by changing the rate amount in the forum's spreadhseets then you would not be achieving what you are stating in your claim. The forum's spreadhseets are designed to calculate statutory interest very well and a great amount of effort has been put into them by Vampiress. But statutory interest is simple interest and so this is what you would achieve but at a higher rate. In my opinion this would be viewed badly because you would in effect be creating your own interest rate - which you cannot do (I gather from reading the above mentioned book).

 

I know that there is a concern amongst the site staff that people are going to rush into claiming contractual interest without properly researching it, but I'm afraid I have to agree with Mindzai's point of view that this idea was initiated by Bankfodder. If it is such a concern for the staff then why was it introduced to the forum without more facts? For example many pages have passed on this particular thread alone with the majority of people not understanding the proper conecpt of contractual interest - and in a lot of cases haven't been corrected. I hope not to cause any offence to anybody who has helped out in the understanding of contractual interest, but for quite a while I was amongst the majority who thought that contractual was just like statutory but at a higher rate. I think that probably a lot of people have added contractual interest onto their claims in the incorrect way and I find this worrying - and I think that this should be the major area of concern for the mods. In my opinion the end result of this could be that people will lose out on this interest because it will not be in any eligible rate - and unfortunately people would probably come back to the mods wondering why they weren't informed of this.

 

I'm not trying to disrespect anybody and I do understand that this whole process is still a learning curve for all involved, but when this topic seems to be such a worry for the mods I just think it should have been more prepared as a concept before it was introduced.

 

Anyway I don't want to get in the way of the legalities discussion anymore but I hope that I've got an important point across. Normally I'm not so confident on issues such as this but after throughly researching and reading the book - which I would recommend for people to purchase before they start or as soon after - I do feel confident that I now know what I'm talking about.

 

Good luck to everybody. Lucid

[lucid]

If it is such a concern for the staff then why was it introduced to the forum without more facts?

Hi bill-k.

 

I've just realised that I didn't make it very clear what I meant by facts. What I was refering to in the above sentence were the important facts surrounding contractual interest, such as in the case of bank accounts, it is compounded and that you cannot calculate it using the forum's spreadhseets.

 

Rest assured I'm fully aware that we are amongst the first few to be filing a claim using contractual interest and that we will provide some important starter facts.

 

Lucid.

[barracad]

Please take note

 

Personal disputes are not permitted on this site.

 

If you have an issue with another user, including moderators, this should be taken up in private. Further inappropriate comments will be deleted.

[BankFodder]

I haven't read the entire thread and I haven't even visited this thread for some time. However, I understand that there is some dispute going on here.

I don't seen any need for this and in particular, attacks or even disparagement of our team of volunteers are not welcome.

 

I have also seen references to me having "backed off" from the contractual rate of interest idea. I have no idea why anyone might think that and if I have written anything here or elsehwere then please link me to it and i will correct it.

 

Frankly I think that the sniping at members of the forum team and comments as to me having backed off show a weakness of judgment which is likley to prove unhelpful when trying to deal with the real problem - the banks and their charges.

 

Claiming the contractual rate of interest seems to me to be a vaild and reasonable thing to do. It will only cease to be so when a court says that it is not. That's how it works in this country.

 

I am not aware that anyone has claimed the contractual rate of interest and has succeeded. However, as far as I know, no one has failed. I am only aware of a couple of claims which have been started which include a calculation for the contractual rate.

 

This means that it is all experimental.

 

It is clear to me that claims for the contractual rate will raise the stakes dramatically for the banks. For this reason it is likely to be very much more difficult than a straightforward claim for charges plus 8%.

For the majority of people who want to get their money back but without too much difficulty, it may be better simply to stick with a claim for charges plus 8% as this is tried and tested.

 

For people who are up for a little more excitement then a claim for the contractual rate may be of interest to them.

However, this will be likely to prolong the claim and increase the risk that the bank may be prepared to go into court. (However, this still poses serious rsiks for the banks which they may not want to face).

 

The argument for the contractual rate is based upon convincing the court to find an implied contractual term of reciprocity within the account contract.

 

The banks' interest mechanism involves a compound calculation and so this means that the same calculation can appy to th cusotmer as well. This is self-evident. Someone in the thread has said "ceteris paribus" but I think that they meant "mutatis mutandum".

 

However, someone in the thread has said that a contractual rate which is not compounded is not an "eligible" rate. This is quite wrong. The court will have no problem awarding you less than it believes you are entitled to if that is all you have aked for.

The rules for awards is that if you win, you will be awarded the value of your claim or less if the court believes that you have over-estimated your entitlement. If you have under-estimated it, the court will never correct your claim for you - and you will have lost the chance to go back into court for the rest.

 

The contractual rate is experimental and I would advise a softly softly approach.

 

You could claim the authorised rate or the unauthorised rate, compounded or simple.

 

In an experimantal claim for the contractual rate I see every virtue in keeping the complications to a minimum.

 

I would definitely want to keep the value very much within the small claims limit. I would claim the authorised rate rather than the unauthorised rate and depending upon the claim vaue which that produced, I would decide to compound the interest.

As an experimental claim I would want to do everything necessary to keep the claim looking reasonable and moderate and straightforward.

 

If we started to develope a track record of successful claim for the contractual rate, I would then review my approach.

 

However, your claim is for your money and it is your risk.

If you can succeed with a bolder approach then we will all be very pleased about it but it is your decision.

 

This forum and this thread gives you an opportunity and a place to discuss these ideas so that you can form your own approach to your bank charges claim.

 

I don't see any reason to become hot and bothered about it but if that is what you want to be then please go away and be hot and bothered somewhere else.

 

geddit?

 

 

 

 

.

[lucid]

However, someone in the thread has said that a contractual rate which is not compounded is not an "eligible" rate. This is quite wrong. The court will have no problem awarding you less than it believes you are entitled to if that is all you have aked for.

I stand corrected - that'll teach me for thinking I know what I'm talking about!

 

I'm sorry if I have added to the confusion but I did genuinely believe that what I said was valid. I thought that contractual interest would have to be calculated in the way that was laid out in the contract - but obviously not. I knew that if it came to settling and people had used contractual simple then the bank would not have a problem with this - because it would be less money. But I was worried that if it went to court then the bank could argue that you don't know what you're doing and have miscalculated - but Bankfodder has said that contractual interest can be either simple or compounded so I no longer need to worry.

 

So if you want to claim contractual simple then the forum's spreadsheets will do the trick but if you want to compound then just remember that they won't calculate this.

 

Anyway I'm going to retreat and wish I had never spoken up now. I hope I didn't misguide too many people in what I said but I thought I was helping.

 

Lucid

[Mindzai]

However, someone in the thread has said that a contractual rate which is not compounded is not an "eligible" rate. This is quite wrong. The court will have no problem awarding you less than it believes you are entitled to if that is all you have aked for.

The rules for awards is that if you win, you will be awarded the value of your claim or less if the court believes that you have over-estimated your entitlement. If you have under-estimated it, the court will never correct your claim for you - and you will have lost the chance to go back into court for the rest.

 

[contractual interest] applies if it was in the original agreement between the claimant and defendant.

 

I think what was actually meant is that unless you compound interest at the same rate as the banks, you are not claiming contractual interest. With reference to the above quote, non-compounded interest ISN'T in the contract, and therefore isn't contractual interest. Whether the court then ignore this error and award you it anyway is another matter, but to argue that it is contractual interest is incorrect. I'd have thought that knowingly arguing something which is incorrect is not a good idea, but I'm sure you know more than me about it.

 

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

 

It is a mystery to me that no one seems to be interest in following this route.

To me it seems clear, straightforward and thoroughly ahievable.

 

Better than that, it is "fair and reasonable" to quote a much used bank phrase.

 

...

 

I can't see that this approach creates any risks for anyone unless it brings the amount claimed over the £5,000 limit. But if it doesn't then there is no problem. If the matter went to court then I would suggest that the N1 was worded to claim the contractual rate of interest or in the alternative, 8% pursuant to section 69 blah blah blah.

 

Your latest post seems somewhat at odds with what you have posted on this subject elsewhere. At first you seem to be encouraging people to go for contractual and saying there "is no problem", and now people are doing it you seem to be saying it's risky and complicated. This is also the stance certain members of the 'forum team' have taken - one minute advising people that "the reality is banks aren't going to court" and the next advising extreme caution. I hope you can see that when you are in the postition you are in, people are going to take you at your word and proceed down the contratual route because of your encouragement. It then causes confusion when you do a u-turn on your approach to the subject. I agree that this is incorrect, but that's the reality of it, and imo you have a responsibility towards your members, depite the fact that this is a self help forum. If you choose to take this contructive critisicm as an attack, I apologise, that is not how it is intended.

[bill-k]

Can I come out from behind the sofa, yet ?

 

It was getting a bit heated for a while, but I think I understand the frustration felt both by the Mods and by us plebs. I imagine the Mods have got us lot on their backs demanding this and that, yet I notice elsewhere that they are also getting a lot less in donations than expected. As for us, it seems that the bottom line is that until such brave souls as Mindzai & Lucid (or jointly aka perhaps "Identity Crisis" ? ) come back from the battle alive, the real facts that we need are not there, and the only way to acquire them is to "suck it and see," unfortunately.

 

Although I believe it is technically not allowed, I am sure that the banks will have their "moles" amongst us, monitoring all of this. We must be careful not to let them see us getting ourselves into too much disarray over things, methinks.

 

I must say thanks to all of you so far in that I have now realised that I should put in a lot more work with my claims. Having tried Mindzai's spreadsheet for compound interest, I realise what a heck of a difference there is. Thanks to both of you. I now propose to re-draft my claims using that. I have one credit card claim against MBNA, and one current account claim against Alliance & Leics (plus others later). I intend to send each another LBA, with the higher compounded interest being claimed, and in the case of the A & L claim, just taking it to 6 years back. I'll wait and see what happens before sending any more claims.

 

Despite my previous questioning of Mindzai & Lucid's Particulars, it seems to me that considering all the work that you have both done on your case(s) that I should use the information you have been kind enough to show us. So if I may, I will use your spreadsheet and Particulars.

 

Whilst I can grasp that Statutory and Contractual interest are different in that they are legally separate methods of reclaiming interest on a sum of money which has been held by the Defendant for a period of time. I can also grasp that Simple & Compound are two methods of calculating interest (of any description), and that compound yields a higher figure.

 

Looking at earlier arguments, my belief is that the importance of precision in claiming conractual is to ensure that your calculations do not exceed the amount that the Defendant would have been able to charge on the Principal, using the terms of the contract. So if the contract states that the interest is compound, and monthly based at XX%, then it is important NOT to calculate compound on a daily basis at XX%, as this will exceed the monthly based amount. I haven't checked my small print yet, but I assume that credit cards use monthly, and current accounts use daily - is that right ?

 

My belief also is that, provided one does not exceed the above maximum, one can claim for any amount below that, as one is simply showing a degree of magnanimity toward the Defendant. The danger (as I believe it was for the Merchant of Venice) is if one should claim one penny (or one drop of blood) more than the Defendant can show is the maximum contractually available (the "Pound of Flesh" itself) - then one is in danger of losing the lot, as I see it. In effect, precision is vitally important if one is going for the maximum (and why not, indeed ?) but less important if one is claiming less than that. Personally, I feel that going for the max. is my route, as we only get one shot at it, and "can't go back later for the rest" (as somebody put it earlier - sorry forgot who).

 

So that's me now, re-drafting everything, and using M & L's models (if I may). I have a question concerning this precision, though, if anybody can help. I tried following another discussion concerning whether or not we should be applying the banks' published AER or APR, which is apparently NOT the actual rate used in their compound calculation. The published unauthorised O/D rate for A & L current accounts is 17.08% (last time I checked) - so do I just stick that in the interest box in your sheet, Midzai - or should I work out what the REAL rate is ? If so, can you tell me how ? I just didn't grasp the maths earlier.

 

I'll be behind the sofa if anybody wants me.

[Mindzai]

Despite my previous questioning of Mindzai & Lucid's Particulars, it seems to me that considering all the work that you have both done on your case(s) that I should use the information you have been kind enough to show us. So if I may, I will use your spreadsheet and Particulars.

 

Help yourself, but on the understanding that it is your own choice to do so. I don't want to be held responsible if you end up losing in court!

 

I tried following another discussion concerning whether or not we should be applying the banks' published AER or APR, which is apparently NOT the actual rate used in their compound calculation. The published unauthorised O/D rate for A & L current accounts is 17.08% (last time I checked) - so do I just stick that in the interest box in your sheet, Midzai - or should I work out what the REAL rate is ? If so, can you tell me how ? I just didn't grasp the maths earlier.

 

You should enter the bank's annual rate - you should then check that your bank's published monthly rate matches that calculated by the spreadsheet. In the tests I did it matched, but your bank may use slightly more 'imaginative' methods of getting from APR to monthly rate. The worst case scenario is it will be slightly underestimating the interest rate should your bank be using any unusual methods. It uses the standard, accepted accounting formula so as far as a court is concerned it should be correct anyway. Always double check everything if you are in any doubt though.

[ukaviator]

Hi Team,

I have personally asked for the contractual interest rate to be added to the claims. I rang my card companies for the amounts in APR on each card, and the staff at the financial institutions give that to you over the phone. One of mine was 22.5%. You have really nothing to lose if you claim at the contractual rate. If the court awards you the claim then 8% is added. If they settle out of court then the full amount is paid. Works both ways you know. They charged you this rate when they ripped you off. Get back every penny.There is a compound interest calculator here:

 

Compound interest calculator

 

This is operated by a solicitors website and seems to work well.

 

Hope this helps. . Ukaviator

[bill-k]

Thank you Mindzai, and of course I understand it's my responsibility if I use your stuff. Thanks also for the AER/APR interest reply. As long I end up with slightly under, as opposed to just one drop of blood over, then that'll do me. I've just had a go at running your spreadsheet on a couple of accounts, and it shows the total compounded interest on the monthly basis as LESS than on the daily basis. I thought daily rate compounded yielded more, not less. What am I doing wrong, here ? And (I've just noticed) why can't it be used for credit cards ? Er - sorry about all the questions - I really shouldn't look a gift horse in the mouth, should I ? !!

 

Thanks, too for the tips & encouragement UKAviator.

[tim2718281]

There is a compound interest calculator here:

 

Compound interest calculator

 

This is operated by a solicitors website and seems to work well.

 

 

Beware: I've just checked this out, and its calculations are wrong.

 

I had it calculate the interest on £100 for one year, using an APR of 24% with monthly compounding.

 

The correct answer is £24.00, but the program came up with £26.82 ... ie, it was 10% out on one of the simplest calculations possible.

 

What it's doing is dividing the annual rate by 12, and using that as the monthly rate. That's wrong; the correct method is:

 

MR = (1 + APR/100) ^ (1/12)) - 1

 

Tim

[bill-k]

Tim,

I too had a go with that calculator, but my complaint with it is that it doesn't calculate interest compounded daily (which is what happens with current accounts, as I understand it). As for your test, I thought that interest on £100 at 24% APR yielded £124.00 if calculated as simple interest, but £126.82 when compounded monthly.

Please - what am I not understanding here?

[Mindzai]

Beware: I've just checked this out, and its calculations are wrong.

 

I had it calculate the interest on £100 for one year, using an APR of 24% with monthly compounding.

 

The correct answer is £24.00, but the program came up with £26.82 ... ie, it was 10% out on one of the simplest calculations possible.

 

What it's doing is dividing the annual rate by 12, and using that as the monthly rate. That's wrong; the correct method is:

 

MR = (1 + APR/100) ^ (1/12)) - 1

 

Tim

 

Yes just tested it with the spreadsheet and it gives £124.

[lucid]

Hi Bill,

 

If you're referring to £126.82 using Mindzai's spreadsheet then this should help although I get £126.24. The spreadhseet compounds the monthly interest including the current month, when in effect the interest shouldn't be compounded until the end of that month. If you look back to August you will see that it gives exactly the same total of £124 as compounding daily would do. The monthly total for September of £126.24 shouldn't be included until the end of the month - the spreadhseet compounds the monthly interest ahead of time slightly. This will be why at the moment the daily reading is less than the monthly.

 

I hope that this helps,

 

Lucid

[bill-k]

Lucid, thanks for that. No, the £126.82 was by using the online calc that Tim was saying was wrong. I couldn't understand how Tim was saying that £124 was correct, when I thought the £126.82 the online calc coughed up was correct. To me, £124 was either simple or possibly compound - but compounded annually (for just one year). Surely, compounding monthly MUST yield more than the simple £24.

 

Regarding your spreadsheet, thanks for the explanation. As the comic stuttered "T...T...T...Timing is everything !"

 

But why shouldn't I use your spreadsheet for credit card claims ?

[tim2718281]

"Please - what am I not understanding here?"

 

The meaning of "APR", I think.

 

The test case was for testing the calculator's correctness on compound interest, and I picked a period of one year to make it easy to follow. (When you're testing a program, you need to know what the result is supposed to be ... by the way, I'm a computer programmer.)

 

The results for 24% APR and 24% simple interest are the same when the period is one year. So my picking a period of one year may have contributed to the confusion. But for a period of two years, simple interest would be £48 while compound interest would be £57.60

 

Getting back to APR: it doesn't matter how often the interest is compounded,

if the interest totals £24 on a sum of £100 after one year, the APR is 24%.

 

This is actually one of the purposes of the regulations which require contracts, advertising, etc to state the APR: it allows comparison of interest rates, regardless of frequency of compounding.

 

Tim