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

[Mindzai]

cool

[Glenn UK]

Hmmmm

 

Now I appear to be in a position, having downloaded the compounding interest sheet i find i have claimed for only around two thirds of the total cliam value i could have and ive sent the LBA off.

 

two choices i guess, swallow the 30% loss or re start the claim.

 

Oh what to do!!

 

 

GLenn

[Mindzai]

A word of advice if you are referring to my sheet is double check it against the latest version (1.2, in my sig) just to be sure, I've had a few tips on the correct decimal precision and other things to give more accurate results. There really shouldn't be a 30% difference over Vamps sheets I wouldn't have thought. Unless you mean you did your calcs manually before and didnt compound?

 

btw I found my claim increased by £80ish but then most of my charges were in the last year or two so it didnt make much diference. Even so I intend to file for the full amount in my claim.

 

[Glenn UK]

A word of advice if you are referring to my sheet is double check it against the latest version (1.2, in my sig) just to be sure, I've had a few tips on the correct decimal precision and other things to give more accurate results. There really shouldn't be a 30% difference over Vamps sheets I wouldn't have thought. Unless you mean you did your calcs manually before and didnt compound?

 

btw I found my claim increased by £80ish but then most of my charges were in the last year or two so it didnt make much diference. Even so I intend to file for the full amount in my claim.

 

 

Thanks mindzai

 

MY claim goes back to early 97, so the time period and method of calculation make a huge difference to me.

 

Hence the big difference between your sheet and vamps.

 

I cut and paste all my charge and interest charged from the original sheet into yours. Had toulock the sheet to copy the formula to cover all my charges. the total charges is the same so it can only be due to the wat the original sheet cals the interest.

 

Glenn

[Mindzai]

Hi Glen, when you say you had to copy the formula over, what do you mean? You shouldn't have to change anything other than the unlocked cells, unless I'm misunderstanding you?

 

EDIT: oh i think I understand - you mean there weren't enough rows for all your charges? Wow they must owe you alot!!

[Glenn UK]

Mindzai

 

I have a total of around 240 seperate charges including those credited back to my account, hence the need to drag the forumal to more cells.

 

Anyway I am trhinking about where to go now with respect to the claim.

 

Glenn

 

Edit They do ow me a reasonable sum, but adding the interest, even using Vamps spreadsheet increases it dramatically, using you sheet it increase more than 4 times the original debt they owe.

[barracad]

Hi Mindzai

 

If somebody uses your spreadsheet to calculate 8% interest alone, does this work it out as a simple 8% or compound 8%?

 

The reason being that s69 allows you to claim simple 8% only. So if somebody adds to their claim contractual interest at XXXX or in the alternative s69 interest at YYYY would they get the simple 8% figure from your sheet, or would they need to use one of the other spreadsheets to work this out?

[Mindzai]

Hi barracad. I'm actually adding a tab right now for 8% interest under s69 which doesn't compound. At the moment it is only really suitable for contractual interest (that's what it was created for), but this will be changed by tonight.

[meagain]

15*(1+0.00045820883324)^2192 = 40.94

 

... which is the correct answer.

 

If I round off the daily rate to 4 decomal places, I get a close figure:

 

15*(1+0.0005)^2192 = 44.87

 

... which is incorrect, and actually gives you an annual rate of 20% instead of 18.2%. 0.05% daily is 20% annual, 0.04% is 15.7% annual.

 

If you must insist on rounding (though I see no reason to do so other than to inflate your claim - forcing the rounding is extra work for Excel), try to 5 or 6 places. Case-in-point: 0.046% gives 18.27% annual, 0.045% gives 17.8%. An error of up to 3%pa might be acceptable for a napkin calculation, but you might not get away with presenting such a figure in court - in particular, if your bank is feeling particularly vindictive, they can (quite rightly) challenge the figure.

[Mindzai]

... which is the correct answer.

 

 

 

... which is incorrect, and actually gives you an annual rate of 20% instead of 18.2%. 0.0005% daily is 20% annual, 0.0004% is 15.7% annual.

 

If you must insist on rounding (though I see no reason to do so other than to inflate your claim - forcing the rounding is extra work for Excel), try to 5 or 6 places. Case-in-point: 0.00046% gives 18.27% annual, 0.00045% gives 17.8%. An error of up to 3%pa might be acceptable for a napkin calculation, but you might not get away with presenting such a figure in court - in particular, if your bank is feeling particularly vindictive, they can (quite rightly) challenge the figure.

I have changed the sheet to remove rounding after coming to the same conclusion, however if you were to work the interest out with a calculator and pen you would not be working to the same precision as Excel. I seriously doubt the Judge would penalise someone who had not used a spreadsheet and thus had inadvertantly inflated their claim. My intention with the rounding was to reproduce similar results to someone using a calculator, but then I suppose that partly defeats the point of using a spreadsheet, which is why i removed rounding.

[meagain]

Makes sense. If you have a calculator that can do the calculations like that with any good degree of accuracy, you spent far too much money on your calculator

 

(Cue jokes about the £500 combined calculator and desk calendar sat on/under the desk ...)

[pelham9]

I am puzzled by some of the statements on this thread and I am worried that some of the calculations are incorrect.

 

It has been said that cheap calculaters do not have the precision to do the compound interest calculations

 

Any scientific calculator which nowadays can be bought for less than £20 can do these calculations to the required degree of accuracy. The maths chips used in modern computers which the Excel spreadsheet ineviatably uses are very cheap and all scietific calculators have the same or equivalent chips.

 

I have seen this statement 0.05%= .0005. It is true that the fraction .0005 is a mathematical eqivalent to .05% but it is very important that the % notation is correctly used otherwise there can be muddle.

 

It can easily lead to the nonsense that 0.05% is equal to .0005% which is obviously wrong. In all calculations of compound interest the period interest should be expressed as 1+ rate/100. Thus for 0.05% the period interest is

1+0.05/100=1+.0005. If this is done the error that the rate is 0.0005% will never be made.

 

For instance a) b) and c) below have all appeared in this thread.

 

a) 0.00045% per day compounded daily gives 17.8% annually

b) 0.00046% per day compounded daily gives 18.27% annually.

c) 0.00047% per day compounded daily gives 18.7% annually.

the correct answers are

a) 0.16438....%

b) 0.16804....%

c) 0.17169....%

 

Now if a)0.045% b)0.046% c)0.047% had beeen the rates used which I am sure was what is meant the results given would have been correct. Note that not only are the results different by a factor of 100 but the actual figures are significantly different.

 

There is one other problem. you appear to eqate the %APR (pedantically this is the correct term) with tha annual rate charged. I have not yet seen a lender who actually charges the %APR as an annual rate. This is because the %APR

is the annual rate rounded to one decimal place. so 16.438%annual =16.4%APR.

 

The banks get there by a roundabout root. They decide what a competitive %APR is say 15.9%APR. They then add up to .049999... to this %APR. to get an annual rate =15.949% (which is what they actually charge) and work out a monthly rate by the compound (route) method. This is then conveniently rounded often to as many as 3 decimal places so that the resultant monthly rate will give the desired %APR. SO the actual rate of 15.94....% has magically transformed in the minds of the majority of cistomers to an annual rate of 15.9%. This matters paricularly if you are taking ^365 or worse ^2190 to arrive at your answers.

[Mindzai]

Mindzai

 

I have a total of around 240 seperate charges including those credited back to my account, hence the need to drag the forumal to more cells.

 

Anyway I am trhinking about where to go now with respect to the claim.

 

Glenn

 

Edit They do ow me a reasonable sum, but adding the interest, even using Vamps spreadsheet increases it dramatically, using you sheet it increase more than 4 times the original debt they owe.

 

Hi Glen,

 

Ive had a real proper look at vamp's original sheet tonight and it doesn't actually compount interest, it just adds simple interest, which explains the large increase you're seeing.

[Mindzai]

I am puzzled by some of the statements on this thread and I am worried that some of the calculations are incorrect.

 

It has been said that cheap calculaters do not have the precision to do the compound interest calculations

 

Any scientific calculator which nowadays can be bought for less than £20 can do these calculations to the required degree of accuracy. The maths chips used in modern computers which the Excel spreadsheet ineviatably uses are very cheap and all scietific calculators have the same or equivalent chips.

 

I have seen this statement 0.05%= .0005. It is true that the fraction .0005 is a mathematical eqivalent to .05% but it is very important that the % notation is correctly used otherwise there can be muddle.

 

It can easily lead to the nonsense that 0.05% is equal to .0005% which is obviously wrong. In all calculations of compound interest the period interest should be expressed as 1+ rate/100. Thus for 0.05% the period interest is

1+0.05/100=1+.0005. If this is done the error that the rate is 0.0005% will never be made.

 

For instance a) b) and c) below have all appeared in this thread.

 

a) 0.00045% per day compounded daily gives 17.8% annually

b) 0.00046% per day compounded daily gives 18.27% annually.

c) 0.00047% per day compounded daily gives 18.7% annually.

the correct answers are

a) 0.16438....%

b) 0.16804....%

c) 0.17169....%

 

Now if a)0.045% b)0.046% c)0.047% had beeen the rates used which I am sure was what is meant the results given would have been correct. Note that not only are the results different by a factor of 100 but the actual figures are significantly different.

 

There is one other problem. you appear to eqate the %APR (pedantically this is the correct term) with tha annual rate charged. I have not yet seen a lender who actually charges the %APR as an annual rate. This is because the %APR

is the annual rate rounded to one decimal place. so 16.438%annual =16.4%APR.

 

The banks get there by a roundabout root. They decide what a competitive %APR is say 15.9%APR. They then add up to .049999... to this %APR. to get an annual rate =15.949% (which is what they actually charge) and work out a monthly rate by the compound (route) method. This is then conveniently rounded often to as many as 3 decimal places so that the resultant monthly rate will give the desired %APR. SO the actual rate of 15.94....% has magically transformed in the minds of the majority of cistomers to an annual rate of 15.9%. This matters paricularly if you are taking ^365 or worse ^2190 to arrive at your answers.

 

Hi pelham, very helpful, thanks.

[Mindzai]

I've updated the sheet to include a tab for statutory interest, as well as written some more comprehensive notes. If you're using an older version you may want to redownload and use this one instead.

 

Link is in my sig.

 

EDIT: caro if you read this i tried to reply to your PM but your box is full. If you still want to check the sheet please use the version below.

[pelham9]

Me again. Sorry

 

I have been thinking I hope constructively about the whole problem of unfiar charges and the interest thereon. This only applies fully to bank interest though for credit cards similar reasoning applies with the proviso that it is even more difficult because of the fiendishly complicated structure of card interest rates.

Please correct me if I am wrong particularly over the actual workings of the interest spread sheets.

 

The total of any unfair charges is made up of

 

1) the actual unfair charge

 

PLUS

 

2) Interest that has been charged on unfair charges. This interest is in itself an unfair charge so from the date it is added it will be treated as 1) so interest on interest will apply.

 

The total of unfair charges is 1)+2) and this should be the amount of any court claim and will be the amount shown in any preliminary or LBA letter.

 

The claimant has been deprived of the total unfair charge (i.e 1)+2)) claimed and at settlement after court claim has been started is entitled to interest at the statutory rate on each unfair charge from the date each charge is made. One presumes that the rate is a simple interest rate but compounded yearly.

 

Now 2) is very difficult to work out as

 

a) The banks calculate interest an the daily account balance adding the monthly total of interest on one day per month. So a daily calculation is required - very difficult for a busy account.(up to 1560 sums over 6 years).

 

b)The banks use a monthly interest rate *12/365(30.1467) to arrive at a a daily rate. They have to publish this monthly rate but this has not been required of them over the whole six years period. I have found it impossible to get a history of monthly rates from any banks - not surprising as they have been conning their customers (and OFT) with the %APR [problem]. They charge more than the %APR

 

c) different rates are charged for authorised and 'unauthorised' overdrafts and it is difficult to apportion the interest betwwen fair and unfair overdrafts. eg If part of the overdraft is fair it will be charged at unauthorised rates if the unfair charges breech the limit.

 

 

This has lead to three approaches.

 

a)Vampiress - ignore the unfair interest charges (2) and claim the statutory interest only. The claim will be less than it should be

 

b)This thread . Ignore the unfair interest charges but substitute the contractual rates charged by the banks for the statutory rate and compound this. The claim will certainly be higher but it will not be in any way accurate. Even assuming that a judge will allow this approach I can see the banks conceding the actual charges in court but challenging the statutory interest that can be applied.

 

c) Why not get the banks to take out the unfair charges? The banks clearly have the software to take out unfair chsrges (including unfair interest) - but they will not do this voluntarily. We need that software. There must be a at least one computer programmer in the CAG membership

who could write the required program?. The programme would need to have all debits and credits inputted with the actual unfair charges taken out,the ability

to calculate any inrterest due and then to calculate, list and and take out any the unfair interest charge each month.

[Mindzai]

Im not sure if I'm missing something but all the available sheets work out interest incurred due to charges based on the amount of interest charged and the balance of the account on that date, and use the sum of this and the charges themselves for the base amount of the claim. The interest on charges is not disregarded, it most definitely included. The whole sum then has interest applied on it in whichever way you feel you can argue, either statutory or contractual. Both of these methods are (usually where a bank is concerned) perfectly acceptable from a legal standpoint. As for the question of authorised and unauthorised overdraft rates, assuming you didn't authorise the bank to 'borrow' your money, you could easily justify charging them their own unauthorised borrowing rate.

[pelham9]

MIdzai.

 

I am trying to ascertain how to calculate the the two elements of the pre action claim. The actual unfair charges are easy but the unfair interest element is in my view very difficult and tedious to ascertain without computerr assistance whether by a spreadsheet or a programme duplicating the bank's system. Please correct any errors.

 

I found your last post somewhat confusing. Are you saying that the various spreadsheets now availabble do in fact calculate interest on daily balances, decide which part of that interest is unfair and exclude this at the monthly interest addition. If so we have no need of anything further. All excluded amounts both charges and interest will be claimed before litigation starts. If that is not true every thing else will be an estimate and could be challenged in court.

 

Having decided on the prelitigation claim and having commenced litigttion it is then possible to ask for interest at the statutory rate on each item of the claim whether unfair charge or unfair interest from the date it is charged to the date of settlement The statutory rate is 8% simple. My own view is that any judge will find it difficult to accept that in these cases the statutory rate should be changed to the contractual rate compounded for each unfair element. But who knows.?

 

The earlier spreadsheets simply calculated the interest at the statutory rate on the charges and the unfair interest element of the claim was missed entirely. If this has changed please inform me and I will shutup!.

[lucid]

The earlier spreadsheets simply calculated the interest at the statutory rate on the charges and the unfair interest element of the claim was missed entirely.

The Vampiress spreadsheets do calculate statutory interest on both the charges and the unfair interest that has ocurred because of charges - the results of both are found on the 8% interest tab. But as she say in the notes page:

 

The interest on penalties calculation aims to demonstrate an estimate of the interest that would not have been charged had the penalties not been applied. If the bank disagrees with the calculation it is up to them to provide a more accurate figure.

Lucid

[Mindzai]

MIdzai.

 

I am trying to ascertain how to calculate the the two elements of the pre action claim. The actual unfair charges are easy but the unfair interest element is in my view very difficult and tedious to ascertain without computerr assistance whether by a spreadsheet or a programme duplicating the bank's system. Please correct any errors.

 

 

Excel is more than capable of doing this

 

I found your last post somewhat confusing. Are you saying that the various spreadsheets now availabble do in fact calculate interest on daily balances, decide which part of that interest is unfair and exclude this at the monthly interest addition.

 

Yes, although not exactly in the way you mention. They look at what charges you have paid at a given date, what interest youhave paid on a given date, and your account balance on a given date. With this information, they calculate what propoertion of the interest debited was purely due to unfair charges. This is then added to the charge itself and becomes your base for applying your own interest at whatever rate and frequencey you decide. While this will not be as accurate as a daily examination of balance and interest, it is pretty close and doesn't require you to know your balance every day for the last x days.

[meagain]

It has been said that cheap calculaters do not have the precision to do the compound interest calculations

 

I was thinking specifically of the average cheap or free-gift calculator that most people will have at home. Put the Windows calculator in "Basic mode" and use it to work out the 365th root. You can't do it. Either way, the statement was intended humorously.

 

The maths chips used in modern computers which the Excel spreadsheet ineviatably uses are very cheap and all scietific calculators have the same or equivalent chips.

 

I think you'll find that this statement is more or less nonsense. The P4 and Athlon XP have integrated FPUs, Intel chips have had them since the 80286. If you know of any calculators with the 487 FPU (which was shipped separately for the 486SX, which had its defective FPU lasered out), speak now, or forever hold your peace.

 

More importantly, nobody who doesn't already own one is going to buy a scientific calculator specifically to do this for their claims, since if they have a calculator they've picked up as a free gift, they can use an approximation and get a good enough answer.

 

I have seen this statement 0.05%= .0005. It is true that the fraction .0005 is a mathematical eqivalent to .05% but it is very important that the % notation is correctly used otherwise there can be muddle.

 

Yes. I read this part, re-read my last post, and let out a loud "d'oh!". I've fixed them.

 

This is because the %APR is the annual rate rounded to one decimal place.

 

This is relevant because ... ?

 

We are estimating the interest. All that matters is that our numbers are close enough. If your rate is quoted as "18.2%", and your estimate results in a rate that is "between 17.8% and 18.3%", that estimate is good enough. If your estimate results in a rate that is "between 15% and 20%", clearly there is room to improve.

[pelham9]

Minzai.

 

So the calculation of unfair interest by the latest spreadsheets is not accurate because the monthly calculation is done on one daily balance only each month - Right? Why cannot the spreadsheets do this accurately by entering daily balances and doing the assessment daily? Many more calculations but that is what computers do. Claimants would have to enter the unfair charges and the daily balances not an insuperable task - one would only have to transpose the balance from statements and enter charges as they occur.

 

Having got and claimed the accurate charges we are then be in a position to argue with the courts over the rate of statutory interest to apply.

 

I have not read anywhere on this website that banks have ever disputed the amount of unfair interest claims. Could this be that every method so far used has underestimated this factor and the banks know this and are keeping quiet?

 

In the past I have written a programme to check the interest payed and charged by banks and it was surprising how often there were errors by the banks sometimes leading to the recovery of substantial sums. Unfortunately these programmes were written over 25 years ago in old style basic and I have no understanding of modern programming. But a spreadsheet that could deal accurately with interest calculations on an account would be invaluable - unfair charges woud not need to be entered so it would be much simpler. The programme I wrote convinced me that the banks were not only greedy and incompetent but dishonest because some 'errors' must have been deliberate. The customer is very unlikely to notice so lets try it on !! Banks are not fair and transparant in the way that they calculate interest as can be said to a much greater extent of the unlawful charges fiasco.

[thewifeandI]

Vamp's spreadsheets do not take rates into account at all. They just calculate that x amount of the interest charged on a given date was due charges, the rest was down to being overdrawn for other reasons. As the value of the charges accumulates over time then the amount reaches 100% of the interest charged. The problems with calculating daily rates (and the statements don't show the whole picture) are avoided. Whilst having a truly accurate interest figure might be nice, it is probably more hassle than it's worth. We probably are under-estimating the amount, but what's left is probably closer the true cost of the breach anyway!

 

I've always thought that what should happen is that we shouldn't claim the interest on charges back, but the bank should reverse all charges from the date they were taken and calculate the new balance forward, thus removing all the interest debited automatically and allowing any interest on the now greater credit balances to be credited and restoring the full status quo.

[Glenn UK]

pelham9

 

i stand to be corrected but as far as i am aware the use of contractual interest rates is a relvitvley new phenomena on this site and the compounding of it, even more so.

 

In essence i have not heard of anyones claim as yet getting as far as a settlement including these elements within it.

 

In terms of the banks challening the claimed interest, i expect they will squeal very loudly when the amounts they pay increase at least in the sense they will use it as a tactic to try to crate confusion and fear on the part of the claimant.

 

However, bearing in mind the numbers of claiminats vs the profits the banks make, i dont see it changing much because the totals being claimed will still be a drop in the ocean for them.

 

JMHO

 

Glenn

[Glenn UK]

I've always thought that what should happen is that we shouldn't claim the interest on charges back, but the bank should reverse all charges from the date they were taken and calculate the new balance forward, thus removing all the interest debited automatically and allowing any interest on the now greater credit balances to be credited and restoring the full status quo.

 

Mind you this wouldnt actually put you back in the position you could have been in would it?

 

The logic behind claiming contractual interest is that actually they have used your money unlawfully and deprived you of the opportuniy to use that money in whatever way you saw fit.

 

You could have taken the money and invested it, squandered it or whatever, one thing is certain if you hadnt had the money unlawfully removed from your account you are unlilkey to have invested it in a current account to get the rates they pay.

 

Finally i doubt that a bank wuodl have allowed you to kepp their money on the basis of only paying their current accountnrates either!

 

Seems to me that its entirely reasonable to apply the contractual rate in the same way that it was applied to our accounts.

 

JMHO

 

Glenn