Less interest for Jan

[chickenboy]

Has anyone else noticed less interest for January (31 days) in TSB, Lloyds, BoS ?

For eaxmple TSB normally pays me between 6.22 - 7.44 depending on the number of days in the month (I have paid in my £1501, and have paperless billing) - yet I received only £6 interest for January??

[cashback]

Yes, I had less interest for January too.

Looking back through my statements, I did receive slightly more than I expected to in December. Perhaps it evens out in the long run?

[chickenboy]

So for 5% TSB Plus account with 2k constant balance...
Previous interest payments (interest net received) and then my basic calculations
02 Feb 16 6.00 January has 31 days 5%*31/365*2000*0.8 = 6.79
04 Jan 16 7.29 December has 31 days 5%*31/365*2000*0.8 = 6.79
01 Dec 15 6.22 November has 30 days 5%*30/365*2000*0.8 = 6.57
02 Nov 15 6.86 October has 31 days 5%*31/365*2000*0.8 = 6.79
01 Oct 15 6.44 Septemer has 30 days 5%*30/365*2000*0.8 = 6.57
01 Sep 15 6.22 August has 31 days 5%*31/365*2000*0.8 = 6.79

So its never right, BUT if you look closely at the days the interest is paid on...
02/02/16 29 Days = 6.3561643836
04/01/16 34 Days = 7.4520547945
01/12/15 29 Days = 6.3561643836
02/11/15 32 Days = 7.0136986301
01/10/15 30 Days = 6.5753424658
01/09/15

It is 20% tax on savings right??
So I still can't make it add up.

ANYWAY... Phoned TSB, they said "oh its a bit beyond me", I said "ok can we raise this to whoever it is up to?", they tried to transfer me, that dept were busy, so they just credited £2 as it looks wrong! Can I be bothered to try this for my other accounts...? (not today)

[planteria]

i like the idea though haha

[chickenboy]

ok - this time got through the department that understands. With TSB Plus - the rate is "5% AER/4.89% gross variable interest paid on balances up to £2,000".
Taxed at 20% - so the December payment was later, so January had effectively 28 days according to their calculation, and if you do:
2000 * 4.89% * 0.8 * 28/365 = 6.00

I had thought I was getting 5%, but its actually 4.89% before tax... (and I guess if you add up the compound interest on 12 * £6 that will give you the extra 0.11% to make the AER figue - not that it applies for most TSB users as you get nowt for over 2k)

[chickenboy]

(so - maths puzzle solved, all is well with the universe, and i'm randomly £2 up!)

[cashback]

Haha, great work chickenboy. Well worth the £2 bonus!

It goes to show how strong the marketing was for this account - 5% appears very clearly in all advertising and I'd naturally assumed that the interest was gross (or at least that the AER and gross were the same figure).

Not that it would have changed my mind to apply for the account in these times of slim pickings for high interest paying accounts.

[planteria]

agreed. the 5% is correct.. but by paying monthly it compounds to 5%.

[mike_p]

It only compounds if your total balance is less than £2k, because any amount over that doesn't earn interest

[planteria]

if you have £2k or more the interest rate is still compounded