calculating interest

[goldmember81]

is there a formula that companies use to calculate interest on a daily basis?

[buildersmate]

HSBC used to take the balance outstanding each day and calculate the interest per day as the headline rate/365. This would get added to the mortgage sum outstanding on the same date each month, dependent on the number of the days in the month. The capital sum then reduced by repayments made during the month (regular plus any extras), tied to the day the repayment was made.

[Loosehead]

yes:

((Rate x amount)/100)/365 (366 LY )

as buildersmate says it's usually added monthly so if it was march then it would be the above amount times 31

[PFA]

I would have though this is the way that they calculate intrest - [(Rate/100) x Loan] / 360 - Please note 360 days is because the banking / insurance year only has 360 days That means any given month will only have 30 days and not 31 / 28. Put it this way - for any insuance payout they will calculate 1/30th of your monthly payback value - hence 360 days

[buildersmate]

You could be right, PFA. The above was based on my experience tracking a mortgage debt using an Excel spreadsheet, when I was overpaying the monthly amount due. It worked to within a couple of pence, but the difference could be your 'banking year of 360 days' concept.