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How is the interest reward calculated on the new online account?

  • 24 June 2020
  • 8 replies
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Userlevel 1

I was just curios to know, now that the new online account/page is up and running - how is the interest reward calculated ?  I know in the greater scheme of things it doesn’t amount to much but as they say, every little helps.

 

I understand that previously, the interest was worked out calculated on the balance carried forward from the last statement.  However, unless I’m reading this incorrectly, that balance now decreases on a daily basis as well as on receipt of each reading - in effect a ‘live balance’ - which would be understandable.

 

Like I say - not a biggy, just curious to know how it now works (if, indeed, it’s changed at all but hasn’t been available to be seen on the previous type of account).

 

TIA

Kevin

p.s.  I hope this is in the correct Category - apologies if not…...

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Best answer by Eva_OVO 25 June 2020, 15:56

Hey @KevinJH,

 

This is a good question - I’m surprised it hasn’t come up yet! :)

 

The interest reward is calculated a little bit different to how it is on the old account, you can find out more about the calculation here

 

On the new online account, the interest reward is calculated on the day before your Direct Debit is taken using the balance on that day or since it was last updated.

 

Balance Prior To Payment x (days since Last Calculation ÷ 365) x interest Reward Percentage

 

I hope this helps!

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8 replies

Userlevel 6

Hey @KevinJH,

 

This is a good question - I’m surprised it hasn’t come up yet! :)

 

The interest reward is calculated a little bit different to how it is on the old account, you can find out more about the calculation here

 

On the new online account, the interest reward is calculated on the day before your Direct Debit is taken using the balance on that day or since it was last updated.

 

Balance Prior To Payment x (days since Last Calculation ÷ 365) x interest Reward Percentage

 

I hope this helps!

Userlevel 1

That pretty much covers it - thank-you for your reply :wink:

Userlevel 2

Hey @KevinJH,

 

This is a good question - I’m surprised it hasn’t come up yet! :)

 

The interest reward is calculated a little bit different to how it is on the old account, you can find out more about the calculation here

 

On the new online account, the interest reward is calculated on the day before your Direct Debit is taken using the balance on that day or since it was last updated.

 

Balance Prior To Payment x (days since Last Calculation ÷ 365) x interest Reward Percentage

 

I hope this helps!

I have a question on the Interest reward on the new online account.

As above I have read when it is calculated. However when is it then applied to my actual account?

It used to always be applied on each monthly bill. Now I get some monthly statements where there can be one Interest Reward, some where there are two Interest rewards and some months where there are none. This makes it very difficult to keep track of.

Userlevel 6
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Hi @Jem16 ,

From my understanding, the OVO Interest Reward is calculated and paid on the spare credit just before the next Direct Debit gets processed on the new platform. Depending on your billing and payment cycles, this can cause a few quirks in some cases.

It should be applied by the time you see it on your account. I’m actually pretty close to triggering it for the first time myself and I’m keeping an eye out. I’ll let you know what happens.

Userlevel 2

Hi @Blastoise186 

The problem arises when the DD date happens to fall on a weekend I think. The Interest Reward is then too late for the monthly statement. This seems to be why on some occasions no Interest falls in a monthly statement.

This statement will see 2 Interest rewards for me. DD date is the 19th so today. Last month there was no interest.

 

Userlevel 6
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Thanks! That helps a lot.

This might take me some time to pin down as I’ll likely have to go through a few cycles before I can reproduce this one. But if I can trigger it, I’ll see what happens. It’s worth noting that Direct Debits take a total of roughly five working days to go all the way through the system. So for example:

Monday: OVO submits a request and it is sent out from their bank (I’ll use Bank of Me for this example). - this is Day 0

Tuesday: the request is currently between Bank of Me and your own bank Bank of Money - this is Day 1

Wednesday: Bank of Money takes the funds out of your account and starts sending it back to Bank of Me - this is Day 2

Thursday: the funds are currently between both Bank of Money and Bank of Me - this is Day 3

Friday: the funds reach Bank of Me and OVO detects the payment - this is Day 4

Bank Holidays and weekends push the process back by pausing it until the next working day. If the request is submitted after 10:30PM, Day 0 is also pushed back to the next working day. I think it’s something like this which can throw the system off a bit

Userlevel 7

Updated on 21/11/20:

 

Please see the info below, taken from this topic guide on the OVO interest reward:

 

How is the Interest Reward calculated?

 

The OVO interest reward is calculated the day before a Direct Debit is taken using the balance on that day.


This is the calculation of how the OVO Interest reward is worked out: 

"(days since Last Calculation / 365) * Balance Prior To Payment * interest Reward Percentage"

Example:


You have a balance of £100 when your previous Direct Debit was taken. Your last payment was taken two days ago and your level of OVO interest reward is 5%. 
= 2(days) /365 x £100 x 0.05 (interest percentage) = £0.027 (rounded up to £0.03)

Userlevel 7

@Jem16 so it’s the Direct Debit date, rather then the date you get your billing summary, that dictates this. 

 

As you mention when the DD happens to fall on a weekend (as is therefore delayed) it might result in the reward being calculated after your summary is produced. 

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