Halifax Miscalculates Interest to their Advantage
In 2011, Halifax were offering an extra 0.2% AER interest on a range of savings accounts exclusively to their qualifying current account customers.
In order to qualify for the Savings Reward deal, the customer had to
- hold an Ultimate Reward Current Account OR
- fund their current account with £1000 or more every calendar month
For any month the customer didn't meet the qualifying criteria, interest on the qualifying savings account was paid at the standard variable rate without the addition of the extra Savings Reward interest.
I opened a Halifax Web Saver Reward online savings account with a variable rate of 2.8% for 12 months. I qualified for the extra 0.2% interest throughout the whole period.
After the 12-months term, I received a letter stating that I had earned an additional £24.60 gross interest at 0.2%. The standard and extra interest were combined in one payment: I received a total of £453.89 gross interest before deduction of tax.
When you look at these figures, it is blatantly obvious that one or both of these amounts must be incorrect as the extra interest has to account for 1/15th of the total interest payment (because 0.2% is 1/15th of the total payable interest @ 3%).
Spot the Difference
From the letter confirming the additional interest we can deduce the interest paid at standard rate, which is calculated by their normal banking system:
interest paid at standard rate:
£453.89 - £24.60 = £429.29
I also downloaded the complete transaction history for the year and calculated the daily standard interest @ 2.8% gross, which confirms the £429.29 derived above.
What I should have been paid:
extra interest @ 0.2%:
(£429.29 / 2.8) * 0.2 = £30.66
total interest @ 3%:
£429.29 + £30.66 = £459.95
The Complaints Procedure
I wrote to my local Bank of Scotland branch stating that my Halifax Web Saver Reward had qualified for 3% interest and that the gross interest amount was £6 short and requested to see the bank's interest calculations. The branch, seemingly unaware of their Savings Rewards offer, replied that the rate applicabable to this account was 2.8%, not 3%.
I wrote back to the branch that the extra interest payment could not possibly be correct for reasons I explained in this article. The branch passed my complaint about the missing £6 on to Lloyds TSB Group Customer Services, however without passing on my letter detailing my caluclations.
I received a phone-call from the Customer Services department, offering to settle the £6 difference I had claimed as a goodwill gesture. After all, this is cheaper than looking into the problem. I insisted to see their calculations and explained again why their pay-out was incorrect. I also assumied that other customers might be affected, too.
Eventually, my calculations were confirmed in writing and I was paid the £6 difference plus £30 for inconvenience and distress. Furthermore, I was assured that the member of staff responsible for the calculation of the additional interest would be provided with further training. I suggest basic secondary school maths for a start.
You cannot rely on your bank's payments and calculations being correct!
And specifically, if you had one of the accounts qualifying for Halifax Savings Rewards, check your interest or request to see their interest calculations. If the extra gross interest is not 1/15th of the overall gross interest payment, you have been short-changed.