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

[Mindzai]

Hi bill,

 

To be honest I haven't looked into the way charges and interest for credit cards work so I can't answer that question.

 

RE Lucid's post I've adjusted the spreadsheet so that it won't calculate monthly interest until the first of the next month. Before it was calculating interest for Sept as we're in Sept, but it now won't make the calculation until Oct 1. This is probably a better way of doing things.

[bill-k]

Tim - sorry, I wasn't being sarky. I think another piece of the puzzle has clicked for me now. If I've got this right, then an APR of 24% is a way of saying that your £100 will become £24 after a year, regardless of how it's calculated. In some cases, it may be arrived at by simple interest at 24% pa., and in others, it may be arrived at by compound at some other rate (which I have yet to understand how to calculate). Yes, I guess I really do need someone to tell me what annual rate to put in my annual rate box on my spreadsheet. APR, APY, AER. I'm afraid my obvious ignorance here is far from bliss.

 

Mindzai - I'm glad I stumbled across something useful !! How soon is the updated version available? or can I tweak mine?

[lucid]

Hi Bill,

 

It's available now. Just follow the link in Mindzai's signature. It should be v1.4.

 

Lucid

[bill-k]

Yep - v1.4 - I got it, many thanks L & M.

[lucid]

OK let me know if you get any problems with it

 

EDIT: This is Mindzai, wrong account again. Must stop moving between computers to post!

[bill-k]

"Identity Crisis" - It's the online equivalent of cross-dressing, I guess. Thanks to both of you - in whichever guise you have appeared to me !!

[tim2718281]

Neither was I ... I think there is lots of confusion, and the example of the incorrect calculator on the solicitor's site demonstrates that.

 

"In some cases, it may be arrived at by simple interest at 24% pa., "

 

I think it's very confusing to introduce simple interest into discussions of APR. The trouble is, for a period of six months, the compound interest at 24% APR would be £11.36, while the simple interest would be £12.

 

The simple interest is higher than compound for periods less than a year, and lower for periods greater than a year.

 

In practice, the differences are small, especially with lower interest rates; so even if the charges you're reclaiming were all in the last year, you still wouldn't be asking for much more than you're entitled to if you were to use simple interest rather than compound.

 

And in the real situations here, anything gained on the less-than-twelve-months swings would be more than lost on the over-twelve-months roundabouts.

 

Tim

[BankFodder]

 

 

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.

 

To clarify, I don't think the arguments are at all a problem. I think that they are straightforward and self-evident. Furthermore, I think that the court will appreciate without difficulty the principle which is being argued; it will not find a claim for contractual interest cranky or at odds with its understanding of principles (this does not mean that it will agree. The court may still decide that there is no implied term.)

I do not believe that it is risky as I don't see why a claim for contractual interest should cause a claim to be alocated away from the SCT.

Where it will cause complications is with the bank and for the claimant who wants his money back quickly, smoothly and without stress. It is likely to cause delays in payments and is capable of taking the claim one step closer to anactual hearing than had it merely contained a claim for statutory interest.

 

I think that the banks have to be broken in to this kind of clim and this means starting small and working up.

 

Don't forget that we are all learnig here.

 

When the site first started our very clear advice was to avoid claiming more than £5000 at all costs (sic). However we now have now seen that this caution was probably unnecessary as there have been many payouts of very substantially more than £5000 from most of the banks.

 

What will we learn about their resistance to contractual interest?

 

=========================================================

 

Elsewhere since my last post someone has suggested that it would be an error to calcaulate the contractual rate based on simple interest and that the court would draw a disfavourable conclusion from this.

 

I wholly disagree. You are simply setting the contractual rate as the basis for your claim. Whether or not you decide to underestimate it is a matter for you.

 

Use it as a bargaining tools if you like.

In your correspondence with the bank tell them that you will accept a reduced payment based on simple interest but that if they force you to issue a claim then it will be correctly calculated and that it will cost them more.

Of course this won't make a blind bit of difference to the bank because they never make any effort to avoid the inevitable. However, you will get brownie points for being reasonable.

 

Of course, the issue of the contractual rate might get blown out of the water the first time the matter is heard - but will it ever come to that.

In order for the issue of the contractual rate to be heard, the banks would have to be prepared to go to court on the basic issue of penalty charges first. They haven't wanted to do that yet.

[lucid]

Thanks for your claification BankFodder. So let's say that a contractual case does get to court, and the judge does not agree that it is an implied term. Would this then result in the entire claim being thrown out, or would the judge just discount the contractual interest and revert to the alternative of s69 (assuming you have suggested this alternative in the particulars)? I realise the answer to this is probably 'it depends on the judge', but from a legal point of view if the judge disagrees with part of the claim that doesn't mean the whole thing is automatically thrown out, is that right?

 

Mindzai

[barracad]

The whole claim would not be thrown out, you would be able to rely on the 8% if you had detailed it on your claim - or worst case scenario if you only mentioned the contractual rate then you would receive no interest but could still win and get back the charges.

[bill-k]

Thanks BankFodder & Barracad. It has been a bit of a worry to me that my case might be found not to be "dead right" and thus completely thrown out as being "dead Wrong." I have really just clung on to my faith that the Small Claims procedure allows for minor errors by laymen. However, I have now also come to realise that if you don't claim something explicitly, then the claim will not be implied by the court, and fallback positions need to be set out in the original claim. If yer doesn't ask, yer doesn't get.

[bill-k]

Tim - thanks for the further explanation. I'm not sure that I'm any the wiser about exactly which figure to put in my annual interest percentage box, but at least I don't feel like I'm the only thick git on the planet !!

[andrew1]

Sorry to butt in - RBS just confirmed payment to me at Contractual rate after speaking with their legal department on credit cards. So it does work . Customer services said they wanted to discuss the 8% or contractual - came back Paid contractual in full -Bankfodder, you are on this thread so a special thank you to you too - I know what you have been doing for everybody since day 1 I also know I've been a pain in the preverberal at times but thank you and all your team. http://www.consumeractiongroup.co.uk/forum/royal-bank-scotland-bank/9448-andrew1-rbs-universa.html

 

Sorry lads.... on you go !

[bill-k]

Well Done, Andrew1 !!!

That's a massive boost for a newbie like me.

Just sent off 3 claims to CC for Contractual, another going on Monday.

Confidence is sky-high, now !!

....so don't apologise to me !

 

Bill.

[octron32]

sorry was going to get someone to look at formula but worked it out

[mnrbig]

Right I am all very confussed as to the spreadsheets. Does any of the spread sheets calculate compund contractural interest on credit cards?

[bill-k]

Hi mnrbig (is that really MrBig in disguise with a typo ?)

 

I've been struggling with the same s**t.

 

First I downed the spreadsheets from the Templates thread, and found the simple one easier to work with (surprise, surprise), but it didn't cater for adding compound interest (which is what claiming contractual rate is all about, really !!)

 

Then I found Mindzai & Lucid have put theirs online for downing, and that was very good for compound interest. But I was still at a loss as to exactly what figure to put in the master percentage box, in order to work the actual compound interest out. Tim helped with this, but in the end I reverse-engineered the formula for calculating compound, so that I could punch in the "AER" or "EAR" rate, and then work out what the compund rate should be. I think I've got it right, now, but I wouldn't mind somebody testing it for me.

 

I'd be happy to put my spreadsheet online for others to test and/or try using - but I don't know how. Anybody care to tell me ??

 

Er...Tim, Mindzai...You there ??

[Mindzai]

mnrbig - the spreadsheet in my sig works fine for bank accounts but from what I gather it cannot be used for credit cards (I haven't looked into this, but I understand interest is calculated in a different way).

 

bill-k - you should just be able to put in your bank's published AER rate to get the monthly and daily rates. Maybe I'll update it so you can type in the monthly rate instead if you know that and have it calculate the annual rate from there too.

[mnrbig]

So it's back to the old calculator then. Anybody know how credit card interest is worked out?

[bram stoker]

If you can hold on a week or so, I'm in the process of creating a whole new batch of spreadsheets.

[bill-k]

Mindzai - sorry I doubted you. I just wasn't quite clear as to exactly which rate to punch in to your (or anybody else's) spreadsheet, as I was aware of the different rates used by the banks, but not of what those differences are. I now realise that your spreadsheet does indeed work out the true compound interest from the AER or APR rate. With further explanation from Tim and various Google searches, I think I eventually grasped it. So I tried it out on Vampiress's simple spreadsheet, and puched in the formulae, then reverse-engineered it to calculate the actual rate from the AER/APR. Then I compared it with yours, and they agree. In doing this, I think I have now given myself a grasp of the subject. If I doubt you or Lucid in future - remind me NOT to doubt you !!

 

I would be interested to know what the difference is with credit card interest, though. The only difference I can see is that

(a) They charge monthly, and quote monthly rates - even though they still calculate interest daily.

(b) their APR rate includes charges for cash advances, so the standard formula might give the wrong result. I think if we use their APR for normal purchases, etc., then that would equate to the banks' AER.

Well - that's MHO, FWIW !!!

Mnrbig - I would certainly suggest you use a spreadsheet, as opposed to your calculator. The formulae are already punched in, and you can just save it and print it as and when required. I see Vampiress is re-drafting hers, too, so that's worth checking out.

[bill-k]

I'm not sure, but I think something needs to be made clear to those who have recently found themselves confronted by the question "Contractual or Statutory Interest?" I get the impression that a number of people are confusing this question with "Should I claim back the interest that the bank charged me on that portion of my overdraft that was actually made up of penalty charges."

Claiming back the overdraft interest that the bank charged on each and every penalty charge on a monthly basis is entirely different from applying Contractual Interest to our claim. I wasn't charged much interest by the bank, as I was rarely overdrawn, so I decided not to go up that road. It looks like a lot of hard work to me.

Claiming interest on the charges that we are asking the banks to return to us is NOT the same as claiming BACK the interest which the banks' originally charged US. The Statutory or Contractual Interest being discussed here is US actually turning round to the bank and saying "OK. - you've had this money from us, and you had no authority to take it. As such it was unauthorised debiting, and by YOUR own standards set out in OUR contract, we hereby charge YOU interest on that. Now YOU either pay up or come up with a damned good reason why not."

Can someone put it a little more concisely and eloquently for me?

BankFodder?

I'm sure it would help a lot of people who are being put off by these apparently complex discussions, when they first stumble, blinking, into the Forum.

[bram stoker]

Please see library for latest updated spreadsheets.

[mnrbig]

Am I being thick, were in the library? I've looked everyware!

[bram stoker]

Bank Templates library

Spreadsheets for interest