1. ## Interest Calculations

Hi, I'm new here and would really appreciate some help with my calculations.

I from the UK and here at the moment there is a lot of consumers reclaiming back money from the big banks for mis-selling insurance products that were useless to the consumer and I am trying to calculate exactly how much is owed to me.

The government has allowed all claims to be paid with a statutory interest rate of 8% per year.

so that would work at 0.66% a month right?

Month 1 i pay £30 for my insurance
Month 2 my £30 is now worth £30.20 (30 x 0.66%) and another £30 is paid so total is now £60.20
Month 3 my £60.20 is now worth £60.60 and another £30 is paid so total owed to me is now £90.60.
Month 4 my £90.60 is now worth £91.20 and another £30 is paid so total owed to me is now £121.20
Month 5 my £121.20 is now worth £121.99 and another £30 is paid to total owed to me is now £151.20.....

and so forth and so forth....

Any help would be appreciated. Thanks

2. Originally Posted by JustChris20
Hi, I'm new here and would really appreciate some help with my calculations.

I from the UK and here at the moment there is a lot of consumers reclaiming back money from the big banks for mis-selling insurance products that were useless to the consumer and I am trying to calculate exactly how much is owed to me.

The government has allowed all claims to be paid with a statutory interest rate of 8% per year.

so that would work at 0.66% a month right?

Month 1 i pay £30 for my insurance
Month 2 my £30 is now worth £30.20 (30 x 0.66%) and another £30 is paid so total is now £60.20
Month 3 my £60.20 is now worth £60.60 and another £30 is paid so total owed to me is now £90.60.
Month 4 my £90.60 is now worth £91.20 and another £30 is paid so total owed to me is now £121.20
Month 5 my £121.20 is now worth £121.99 and another £30 is paid to total owed to me is now £151.20.....

and so forth and so forth....

Any help would be appreciated. Thanks
The government has allowed all claims to be paid with a statutory interest rate of 8% per year.
Typically this DOES NOT allow monthly compounding.

At the end of the first YEAR you would have
$30 \times 0.08 = 2.4$ INTEREST.
30 + 2.40 = 32.40 at the start on the following year.

$32.40 \times 0.08 = 2.592$ INTEREST gain during the second year.

32.4 + 2.592 = 34.992 at the end of the second YEAR and the beginning of the third year.

The interest will only be compounded only on a YEARLY basis.