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# OVO Interest Rewards - how is it calculated?

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Please can someone tell me if I have interpreted the reward scheme correctly?

In year one OVO will pay 3% of the amount in credit up to a maximum of 3% of £1000. i.e. £30. Is this correct? (If it is it means OVO are paying a lot more interest than the high street banks)

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Best answer by Anonymous 15 March 2018, 14:52

Updated on 09/11/20: The info here has been 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)

Where can I see this OVO Interest reward payment?

The interest reward payments will show in the ‘Charges’ section of your online account, shown here:

Why can I see a low Interest Reward amount for the month after I went onto the new billing platform?

This is because in the first month of being on the new online account/billing platform, the OVO Interest reward is calculated from payment to payment and not for a calendar month, so you might have your first OVO interest reward payment calculated just a couple of days after being migrated.

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Userlevel 5
Yes!

The OVO Interest Reward is calculated monthly as 3% per year, using the amount of
any credit left in your account after you’ve paid your bill, and the number of days
you are in credit in the relevant month.

The credit amount used to calculate your OVO Interest Reward is capped at 12
times the amount of your current direct debit amount. So yes, 3% on £1000 if your DD is at least £83 a month.

Yes, better than banks, and it’s classed as a discount so no tax!

Remember, as per your contact:
You must not make payments into your account just to receive the OVO Interest Reward.

If OVO think you’re making payments into your account just to receive the OVO
Interest Reward, they may refund the extra amounts to you and may withhold
payment of the OVO Interest Reward on those amounts.
Userlevel 2
Hi,

I'm trying to understand how you calculate the interest on my account when I'm in credit.

To take a specific example:

My 2nd Jan statement (for 1-31 Dec 2017) shows that I was £12.11 in credit on 1st Dec, and the 4% interest has been calculated on that (£0.05). However, my 1st Dec statement doesn't include the £41.00 DD that was taken on 1st Dec, and was credited to my account on 2nd Dec.

So I was actually £53.11 in credit from 2nd - 31st December (and this was shown on the MyOvo home page), but the interest for December was calculated on the balance at 1st Dec as though that was the figure for the whole month.

If I am right, I have effectively been "cheated" of £41 x (29/31) x 0.04 = £1.53 over the whole year. If I am wrong, where is my misunderstanding, please?

If the calculation is always just based on the credit balance on the statement date, can I change my DD date to a few days before my monthly statement, so that my statement accurately reflects my true balance? (I'm an online-only customer, and can't see any way of doing so).

Richard.

Updated on 09/11/20: The info here has been 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)

Where can I see this OVO Interest reward payment?

The interest reward payments will show in the ‘Charges’ section of your online account, shown here:

Why can I see a low Interest Reward amount for the month after I went onto the new billing platform?

This is because in the first month of being on the new online account/billing platform, the OVO Interest reward is calculated from payment to payment and not for a calendar month, so you might have your first OVO interest reward payment calculated just a couple of days after being migrated.

Userlevel 2
Thanks, but I think you're wrong. Even if a DD on (say) the 25th isn't included in the balance shown on the subsequent statement (on the 1st), from the second month with the new DD date my b/f balance should consistently be higher than it is now, by the value of the DD.

I've changed my DD date to the 25th anyway, so I'll know for sure in a couple of months ... :-)

Cheers,

Richard.
How is the interest reward calculated, please? It looks incorrect to me!
Userlevel 6
We already had a topic on this, @Cbee, so I moved your query here.

Check out the best answer for more info on this! 🙂
Userlevel 2
I think you will find that the REWARD is subject to VAT whereas the DISCOUNT was not.
This is obvious from my account details as the reward for 3 months was £14.29 not £15.
Userlevel 6
That's not correct, @JimTraynor. All charges are listed on your bill summary without VAT included initially, then VAT is added to all transactions (whether positive or negative). So to begin with your SSR will be listed as £14.29 per quarter, then with VAT added you'll get the full £15.

Thanks
Userlevel 2
Nancy_OVO
Thanks for your answer.
I'm afraid I could not follow your argument so I looked closely at my statements both before and after the October change. I now see that the October change did not cause the £5 discount to be reduced. It has always been reduced by OVO's strange method of calculating the charges to be applied. I have shown a statement from before and one from after October. I have also shown the very simple way I believe the calculations should be done. Please advise me of why my calculations are wrong. In any case it is certainly true that giving the discount every 3 months certainly loses the value to good customers and gives OVO a financial gain.

Simple calculation OVO calculations

Balance brought forward £158.70 £158.70

Electricity charge £13.63 £13.63
Gas charge £25.28 £25.28
Total charge £38.91 £38.91
OVO Interest reward 5% £0.66 £0.68
Online discount £5.00 £4.86
subtotal £5.66 £5.54
Total charges before VAT at 5% £33.25 £33.37
VAT £1.66 £1.67
Total new charges £34.91 £35.04
New Balance £123.79 £123.66

Balance brought forward £267.66 £267.66
Electricity charge £78.37 £78.37
Gas charge £39.36 £39.36
Total charge £117.73 £117.73
OVO Interest reward 5% £1.12 £1.14
Online discount £15.00 £14.29
subtotal £16.12 £15.43
Total charges before VAT at 5% £101.61 £102.30
VAT £5.08 £5.12
Total new charges £106.70 £107.42
DD Receipt £170.00 £170.00
New Balance £330.96 £330.25
Userlevel 2
I'm afraid the figures above have lost the layout which was shown just before I sent them. If the second price in each row is moved away and lined up' they will be the OVO calculation and the first prices can be lined up and taken as my calculation.
Yeah I'm not so sure about mine either!

My interest reward has ticked up to 4% now. So here's some maths:

My DD is £85 so I'm definitely above the DD x 12 rule
My balance before statement was £664.01
Statement costed £41.19 (balance now £622.82)
DD paid in £85 two days after (balance now £707.82)

So, based on this thread, the interest reward should be £664.01 x 0.04 (4%) = £26.56
Interest is calculated on a per-year basis, not per month, so £26.56 / 12 = £2.21
But on my statement, I see interest reward as £1.97

Is my maths not correct?
Userlevel 6
Here's how we calculate the interest reward, @DanTheBrit.

Does this help? :)

Userlevel 2
Taking the lowest figure DAN mentions (662.82) and assuming a 30 day period (I suspect he is referring to the June- July statement:
30/365*0.04*662.82 = £2.18
He says OVO quoted him £1.97 ??????????????
If OVO used 3% by mistake the outcome would be £1.63 so I cannot see where the OVO figure comes from.
Userlevel 6
We'd add 5% VAT onto your interest reward too (well, everything is calculated net and then 5% applied to the whole bill). Could that be where the different is coming from?
Userlevel 2
Nancy.
Having seen the entry by Dan I became interested in checking my own figures which I shamefully admit I had not done in the past as I assumed that something like this would be calculated correctly from a simple formula. I took all my figures for the last year and calculated what the payment would be when the calculation was based on, the incoming credit balance, the final balance and on the average of the two.
I compared this with the actual payments from OVO and found that the yearly payment came very close to the calculation based on the incoming balance.
However the payment did not match the calculation in any single month. The payments were sometimes higher and sometimes lower than the calculation (as much as 9p (a significant percentage) in one case).
I think anyone who understands how formulae can be used to service a system like this (I have a degree in mathematics) will agree that variations like this should not happen.
I think that OVO should be very willing to advise us of how they calculate the payments and explain why they are so inconsistent.
Your suggestion the the 5% VAT could be the answer is definitely not correct.
The yearly error in my account is so small that I would not be worried about it but I am worried about how the results can vary so much month to month and would like to hear what causes this.
If this value is being incorrectly calculated, why should we believe any other figures OVO supply?
Userlevel 6

The team would need to look into this, @JimTraynor, get in touch with us over FacebookTwitter or webchat via the Help Centre with your name, DoB and account number.

Userlevel 2
This is probably the wrong place to ask this question, but I hope it can be passed to the correct person.
Can you give me any info,especially (but not exclusively) with regards to pricing (even if only an estimate), about the new OVO and SUNAMP Heat battery offering?
Jim
Userlevel 6
I'll do my best to find out some info and get back to you, @JimTraynor, in the meantime there is some handy info here.

Cheers!

In regards to my consecutive statements in credit without receiving the reward interest, I was just e-mailed: “Thanks for getting in touch about your interest reward. So I have checked back on the history of the account and the way that the interest reward is calculated is that it takes the balance on the day before the direct debit is paid. So at that point, due to an increased usage over the winter period there was insufficient credit to pay an interest reward on.”

This contradicts every answer posted on this forum and is clearly not what is stated on the help page https://www.ovoenergy.com/help/interest-reward

How do we work it out?

If you're in credit when we generate your statement, we'll work out your OVO Interest Reward based on the credit balance brought forward from that statement. You'll then see it on your next statement.
Oh, and don't worry. Although we give you interest when you're in credit, we'll never charge you interest when you're in debt.

I have probably stupidly lost my self service reward with my e-mail, but I find it super frustrating. Will likely be changing supplier after my contract is up because I would rather just have straight forward billing. The reward interest and self service rewards are just gimmicks.

Userlevel 6

I’m really sorry, @Energy_user, but it looks like the agent that responded to your email got the wrong end of the stick.

The interest reward is calculated as advised on the website you linked. So that we can look into this please reach out to our team, I can assure you this will not impact your self service reward.

You can send us a message on Facebook, Twitter ,the team will look into this today.

Thanks!

I’m starting my third year with OVO, so i now get the top award of 5%. It states that you get 5% on the balance carried forward from the previous month.

I’ve checked my statement for March 2020 and i was awarded £3.70., despite a balance of £979.82 brought forward from February.

How can that be…..5% of £979.82 is £48.99.

I must be reading it incorrectly on how the interest award is calculated but i can’t find it, because all can find is its 5% of the balance carried forward

Userlevel 7
+4

Thanks for posting @GaryM

If you want to check the calculations, there are two other factors to consider.

a: it’s 5% per annum, not each month!

b: you are charged 5% VAT on energy purchases, but zero on interest payments

Good luck with the arithmatic

Hi I think you’ll find the interest rate is annual, not x% per month. So each month you entitled to 30/365ths x interest rate x balance, not the whole (5)% - that would be an annual rate of 60%!

Your credit sounds right to me, as an amateur (who works in finance btw)

Hope this helps….

Thanks, I was sure I was missing something don't remember seeing annual but I guess if it was monthly my gas/electric would almost be free which wouldn't make good business.

Appreciate your replies 😊