The Interest Savers

SAMPLE STATEMENT 6 HOME LOAN CHECKER
INTEREST CHARGED ON 25TH AUGUST 2000 OVERCHARGED

Notes:

1. The start date is the date of the previous ‘interest debit’ shown on the statement
( 25th July 2000).

2. The end date of 24th August 2000 is the date prior to the ‘interest debit’ being checked
( 25th August 2000).

3. The opening balance is the last balance shown at the end of the start date ( $247,427.62 ).

4. The interest rate is the interest rate shown on the statement. The interest rate should be shown on your statement. If it is not shown, the lender must provide the interest rates.

5. The number of days box is automatically set at 365 days which is used in the lenders formula.
You may change this to 366 days for leap years as the lender should use 366 in their formula for
leap years. This lender has NOT used 366 days in this leap year resulting in additional overcharging.

6. When the balance changes the new balance at the end of the day is inserted by clicking the ‘ADD’ box shown on the left hand side of the screen under Daily Balance Entries.
Lenders calculate interest each day on the balance at the end of the day.

7. The Revised Interest Rate box at the top right side of the screen allows for interest rate changes.

8. The Interest Debit amount at the bottom of the screen shows the interest that should be on the statement ( $1,662.46 - the statement shows $1,687.87 which is incorrect ). This is an overcharge of $25.41 for the month. When 366 days is used for leap years the overcharges are greater. See next screen shot.
This is obtained by clicking the Compute Interest box.

SAMPLE STATEMENT 6 HOME LOAN CHECKER
INTEREST CHARGED ON 25th AUGUST 2000 INCORRECT WHEN CONSIDERING LEAP YEAR

Notes:

1. The only difference between this screen and the previous screen is we have used 366 days for the calculations because of the leap year ( 2000 ).

The resulting interest debit at the bottom of the screen shows the interest to be $1,657.92 NOT $1,662.46. This is an additional overcharge of $4.54 on top of the major overcharge of $25.41 for the month.

[1] Name of lender.

[2] Address of lender.

[3] Telephone number for statement and account enquiries.

[4] Facsimile number of the lender.

[5] Name(s) and address of the borrower(s)

[6] Statement Period: This statement begins on 26^th May, 2000 and ends on 25^th August, 2000.

In this case it is a three-months period. It should show all transactions that have occurred during that period. E.g. It will show :

· the opening balance [ i.e. the balance owing at the start of the period ]

· the closing balance [ i.e. the balance owing at the end of the period ]

· all credits [ i.e. all repayments and any other payments and or reversals

made to the account to reduce the balance owing ]

· all debits [ i.e. all interest charges (usually monthly)

all bank fees and charges (usually monthly)

all government fees and charges (usually monthly)

any reversals that will increase the balance owing.

[7] Account type and account number.

[8] Date Column: The dates on which each transaction occurs are shown in this column.

There may be more than one transaction on any date.

Debit transactions (Interest Charged, Bank Fees and Charges, Withdrawals, Government Charges etc.) will increase the balance owing

Credit transactions (Repayments made by the borrower) will reduce the balance owing.

[9] Transaction: This column shows a description of the transaction.

i.e. Repayment (reduces the balance owing)

or Interest Charged (increases the balance owing)

[10] Debits Column: This column shows the dollar amount of each transaction that increases the balance owing.

E.g. Interest Charged

[11] Credits Column: This column shows the dollar amount of each transaction that decreases the balance owing.

E.g. Repayments

[12] Balance Column: This column shows the balance owing after each transaction and/or at the end of each day

when a transaction has occurred.

[13] Interest Rate: An interest rate of 7.90% applied from 11^th May.

A new rate of 7.92% applied from 8^th August.

[16] This is a ‘leap year’ and the bank should have used 366 days in interest rate formula to apply to outstanding balances. The bank has used 365 days in their formula resulting in the bank overcharging INTEREST by approximately $4.50 per month.

This particular bank would have many million accounts which would result in a significant ‘additional profit’ every 4 years.

[14] Statement No 1: This is the 1^st page of the 12^th statement issued for this loan.

[15] Please check your statement promptly.

The bank is informing borrowers that it is their responsibility to check their statements for errors.

Most borrowers do not have the means to check the mathematical accuracy of their interest charges.

TRANSACTIONS

2000 Opening Balance This is the amount owing by the borrower at the start of this statement 25^th May, 2000.

01 Jun Deposit – TRF A deposit of $1,941.10 was transferred from another account to reduce the balance

owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

01 Jun FID – Govt Duty An amount of $1.17 of government duty was charged to the account.

26 Jun INTEREST Interest of $1,728.06, for the period from 25^th May to 24^th June was charged

to the account. This increases the balance owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

03 Jul Deposit – TRF A deposit of $1,937.50 was transferred from another account to reduce the balance

owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

03 Jul FID – Govt Duty An amount of $1.17 of government duty was charged to the account.

14 Jul Deposit – TRF A deposit of $3000.00 was transferred from another account to reduce the balance

owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

25 Jul INTEREST Interest of $1,557.87 for the period from 25^th June to 24^th July was charged

to the account. This increases the balance owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

01 Aug FID – Govt Duty An amount of $2.96 of government duty was charged to the account. This amount

relates to the deposit of $3000.00 made on 14^th July.

25 Aug INTEREST Interest of $1,687.87 for the period from 25^th July to 24^th August was charged

to the account. This increases the balance owing by the borrower. Interest is calculated on the new balance each day until the balance changes.

25 Aug CLOSING BALANCE An amount of $249,118.45 is owing by the borrower at 25^th August, 2000.

YES NO

[1] A Summary Page to show the following information: *

Borrowers’ name and address *

Borrowers’ account number *

Number of statements issued *

Page number for this statement *

Statement Start Date *

Statement End Date *

Previous Statement end date *

Opening Balance *

Closing Balance *

Total of all Credits *

Total of interest charged for the period *

Total of bank fees & charges for the period *

Total of govt. fees & charges for the period *

Total of all reversals during this period *

Current interest rate charged *

Interest rate changes *

Required minimum repayments *

Lender’s telephone number for enquiries *

MAIN STATEMENT to include:

[2] Borrowers’ name and address *

[3] Borrowers’ account number *

[4] Number of statements issued *

[5] Page number for this statement *

[6] Statement Start date *

[7] Statement End date *

[8] Date Column *

[9] Transaction Description *

[10] Debits Column *

[11] Credits Column *

[12] Balance Column *

[13] Interest Rate *

[14] Interest Rate Changes & dates *

[15] Lender’s telephone number for enquiries *

MISTAKES and/ or ABNORMALITIES in this Statement:

[1] This is a ‘leap year’ and the bank should have used 366 days in calculating the correct interest rate
formula to apply to outstanding balances. The bank has used 365 days in their formula resulting in the bank overcharging INTEREST by approximately $4.50 per month.

This particular bank would have many millions of accounts which would result in a significant ‘additional profit’ to the bank every 4 years.

[2] The interest charged on 25th August of $1,687.87 should have been $1,662.46
(Leap year calculation would have been $1,657.92).