BOQ and ING Bank Saving Rates in Feb 2023

Lmyrandomstranger on 01/03/2023 - 09:58
Last edited 01/03/2023 - 10:19

I have just checked my 2 saving accounts on 1 March to see whether the interests are correct. It turns out to be not as expected:

Bank of Queensland Future Saver:

  • Saving: $50k
  • Actual interest earned this month: $183.43
  • Calculated Annual Rate: ($183.43 x 12months) / $50k = 4.4%
  • Advertised rates: 4.75%-4.95% this month

ING Bank:

  • Saving: $51k
  • Actual interest earned this month: $184.28
  • Calculated Annual Rate: ($184.28 x 12months) / $51k = 4.34%
  • Advertised rates: 4.80% this month

There is quite some difference in the rates. Is anyone else get similar results?

I understand each day's rates may be different depending on the bank, but dropping from 4.8% to 4.3% is a bit too much I think. Just wondering if anyone can explain it 🤔

Edit:
Thanks @forrester for explaining 😂 Totally forgot Feb only has 28 days.

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Comments

  • oscargamer on 01/03/2023 - 10:01
    -1

    Nope, I can't explain it

  • forrester on 01/03/2023 - 10:06
    +20

    It's because we have 28 days in February compared to months of 30 or 31 days. Approximately 10% shorter than other months…

    • KaTst3R on 01/03/2023 - 10:22
      +2

      And also the advertised rate is an effective interest rate (i.e. compounded daily). OP cant just multiply the monthly interest by 12 and divide by the principal to get an annual % figure.

      Without spending time to do the calculations, it looks broadly correct. It will be below the advertised rate slightly if OPs want to calculated it crudely. It will be the correct amount if you take into effects of compounding.

      • Love a bargain on 01/03/2023 - 13:46

        Incorrect, the advertised rates aren't on a daily compounding basis.

        E.g. According to Macqurie Bank (the same would be true for other banks:

        If interest is payable on your Account, it’s calculated on a daily basis using the following formula:
        Daily Closing Balance X interest rate applicable to your Account/365

        • KaTst3R on 01/03/2023 - 13:54

          You are right, advertised rate is the Nominal Rate. I retract my statement.

    • coffeeinmyveins on 01/03/2023 - 11:45
      +1

      To add to this if you added money throughout the month then you can't just take a broads stroke approach to calculating the interest.

      All of these factors explain why you're getting a "different" rate, no-one is short changing you.

      • Love a bargain on 01/03/2023 - 13:42

        Yes, those factors can explain the difference - but it's also not unheard of that banks have stuffed up their interest calculation in the past.

        If OP is curious enough, he can calculate his interest on a daily basis and add the interest for each of the 28 days in February up to see if he agrees with the banks' calculations.

  • Donaldhump on 01/03/2023 - 12:11

    afaik

    interest per day = X *( P/100) / 365
    where X is lowest balance in your account on a given day

    • Love a bargain on 01/03/2023 - 13:40
      +2

      Should be closing rather than the lowest balance on the day. E.g. If I had $50k in the morning and moved $5k out, and I got paid $5k in the afternoon. the balance used for interest calculation for the day should be $50k, not $45k.

      • Donaldhump on 01/03/2023 - 14:51

        should or is? you may be right but to me isn't logical as could allow people to wire money east to west contonously

        what is the closing time ? midnight?

        could i move my money from a sydney based bank to a w.a based bank at 12:01 and double dip on interest?

        when i got my last home loan i move in 100% of the balance into offset on day 1 and got charge interest for the day if that debunks what you said, not that i cared about the $42

  • Magic Mirror on 01/03/2023 - 13:55
    +5

    Advertised rates: 4.80% this month

    Nope! It was 4.55% from 1st to 13th Feb, then 4.80% from 14th onwards.

    $51,000 * 4.55% / 365 * 13 = $82.65
    $51,000 * 4.80% / 365 * 15 = $100.60

    So total is $82.65 + 100.60 = $183.16 if you had exactly $51k through the whole month.

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