Ecb +2.25% = 3.2192% ??

S

Shakespeare

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Hi
Hope someone can help me in understanding the following:
I have a rolling month deposit account with Ulster Bank (formerly a First Active A/c) whereby the rate is set at ECB +2.25%.
I received a statement recently showing the rate of 3.2192%P.A
When I queried why this wasn't showing as 3.25% (which is used to on the old FA statements), I was told, it's very complicated but it's just the way the system works it out but I would still be getting the equivalent of 3.25% but the way the "system" calculates it makes it look like a different rate but I'm not losing anything!!??

Can someone help me out with understanding how this is so, as you can imagine the above explanation leaves a little to be desired and doesn't inspire faith.

Thanks
S
 
Could it be because your deposit compounds each month and you earn interest on the interest which would make the overall effective rate 3.25%?
 
I think Patrickjd is right. If you start with a deposit of €100 and compound the interest monthly using an interest rate of 3.1292%, you get the following:

starting deposit |100.00 after 1 month|100.27
after 2 months |100.54 after 3 months |100.81 after 4 months |101.08 after 5 months |101.35 after 6 months |101.62 after 7 months |101.89 after 8 months |102.16 after 9 months |102.43 after 10 months |102.70 after 11 months |102.98 after 12 months |103.26
 
Hi
Thanks for that. I suppose my issue is that as it's a rolling monthly account, I was originally told that the % rate on it was ECB+2.25%, not necessarily only getting to 3.25% after 1 year of rolling it over - not quite the same thing.
Is it a bit sneaky or am I being unfair?
 
Strange. Ulster Bank phoned my house last week when I wasn't at home. I rang back and the official that I spoke to said that xxx was phoning people to discuss their ECB account. I asked him to ask the person who phoned me to ring me back. He never did. (Yet more crap service from Ulster Bank.) Anyhow I called to the bank during the week and I was told that everyone who has an ECB account was being phoned to let them know that there were "better" accounts where you can put your money.
When was the last time a banker phoned your home to let you know you could be getting a better interest rate? Something strange going on?
 
Sounds like they are trying to get people off old loss making deposit accounts.

Their definition of 'better', no doubt, is better for UB, rather then the customer, in the medium term.
 
Hi Ciaran T
To answer your question, it's actually an old First Active Money Market Account.
TBH, if they phoned me up to say there was a better deposit account available - I know there are accounts offering more than 3.2% but what I want to hold on to is the facility of having a guaranteed margin over the ECB rate of 2.25%, particularly as my mortgage tracker is +.75% and when the ECB rate rises come, the banks won't be increasing their deposit rates if they don't have to whereas with this account, they will have to and subject to further increases in DIRT, should mean earning more interest on deposit than paying on the mortgage.......
 
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