We know that banks charge interest on the daily balance of a home loan but does anyone know at what time of the day they recognise the account balance? And what time zone they use?
What Time Do Banks Recognise Your Loan Balance?
capslock on 08/03/2023 - 06:11
Comments
Loan agreement should specify this.
For example, Athena had:
Interest charges are calculated by applying the interest rate to the unpaid balance owing to the Lender at the end of each day. This unpaid balance is the amount outstanding on your loan, less any amount in your redraw. The end of each day for calculating interest charges is 12.00 am (midnight) Eastern Standard Time. The interest rate applied each day is equal to the annual percentage rate applicable to the loan at the time divided by 365 if the applicable calendar year at the time (based on the Gregorian calendar) is not a leap year, and 366 if the applicable calendar year at the time is a leap year.Others I've seen take the highest balance owed on the particular day and apply that each day.
Maybe it is a nano-second after the Reserve Bank Timezone.
about 6:30 PM
ten to 4, also known as tree fiddy
.
It's at close of business every day. In practical terms, any transaction with a value date of today will be included in today's balance.
You can't game it to move money intra-day to either earn extra deposit interest or dodge loan interest.
at close of business every day
That's a quaint term from back in the old days when I worked for a bank, and when they closed their doors they were closed for business for the day. Business doesn't close for business each day. It keeps operating 24 hours a day.
But you're right. Transactions are dated. If it is dated today, because it was deemed to have occurred on today's date, then it is counted as having occurred today. Even if it was a double dated transaction that the bank was made aware of on an earlier or later date.
queue question "i could move money from one bank to another in a different TZ and beat the system"
Do it enough times and get flagged by AUSTRAC. Brilliant…
Nothing will happen with AUSTRAC if the transfers are all legitimate?
If you keep transferring in and out of a bank assuming this is a large amount in the offset to avoid interest liability, it may trigger AUSTRAC to ask questions as this could be flagged as unusual activity.
Nothing will happen if it is legal but you have to explain where the source of funds come from which is a hassle.
Unless I'm not understanding what is OP's intention is. If it is just a prepayment, then it doesn't matter as at most you are paying one extra day of interest if it's paid at the same time everyday.
I would say midnight - so at the end of each day, just like they would charge you a dis-honour fee for having a negative balance at the end of the day.
I assume interest and interest charges are calculated daily this way.You know you are in trouble when you need to worry about what time the bank calcs your balance interest component.
The OP needs to get an offset account or at least a free redraws - which is GOLD in a home loan.
Ask your bank