AIB charged Clearing interest

We bank with AIB and lodged a very significant cheque into our current account. We then transferred it to our deposit account on the same day- both accounts in AIB.

We were charged a significant amount of money in clearing interest.

I now understand this is normal to charge clearing interest. But as it was from AIB current a/c to an AIB deposit account is this reasonable on their behalf?

thanks

Was this an Irish cheque lodged to an ordinary euro-denominated account? I don't see why there would be any "interest" to be paid. Are you sure it's not simply a charge for making over-the-counter transactions, or for being allowed to transfer the funds out of the current account before the usual "clearing" period of 3 days had elapsed?

What sort of amount was charged? I would certainly ask them for an explanation of how it was calculated (AIB have an extremely poor on this count, after all...!)

But as it was from AIB current a/c to an AIB deposit account is this reasonable on their behalf?

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This is not why you were charged interest.

You lodged a cheque on Day 1.
It does not clear until Day 3 (?) assuming it was an Irish cheque.
So you don't get value for that cheque until Day 3, although it shows up on your account on Day 1.
If you take the cash out on Day 1, you are overdrawn and will be charged interest on your account and surcharge interest if you did not have an overdraft.

I don't think it makes any difference if you transfer the money to another AIB account, a BoI account, or just withdraw cash. You are overdrawn, and so will be charged interest.

If it was €100,000
The rate for a year should be c.10% or €10,000
For one day, it should be €27
So for three days, it should be around €90

If you had an unauthorised overdraft, there would be surcharge interest. The surcharge rate is 12%, presumably on top of the 10%. So for €100,000, you would have been charged around €200 in total.

How much was the amount and how much were you charged?

You can ask them to show you the calculation although it will take them some time to print it off for you.

Brendan

If the drawer of the cheque operates from the same branch as yours then technically there should be no "clearing" interest as the cheque should clear immediately.