27 May, 2007

Banking Policy

Anguilla Banks’ Dirty Little Secret. A reader has sent me this heartfelt complaint. I am sure that at one time or the other we have all wondered about the same thing.

I had cause to question interest received from NBA recently. Let’s say that the hypothetical balances in a certain quarter were:

Day# ---- Description ---- Amount ------------ New Balance

0 ---- Brought forward -------- 0 ---------------- 1,000

1 ---- Deposit ------------ 99,000 ------------- 100,000

8 ---- Deposit ----------- 200,000 ------------- 300,000

My expectation would be that NBA (in this case) would calculate 1,000 times 91 days at the appropriate interest rate (say 3%) so $1,000 x (91/365) x 3%, then a further 99,000 x ([91 minus 1]/365) x 3%, then a further 200,000 x ([91-8]/365) x 3% - or something like that. In other words, if the bank has the use of your money for a period of time, it pays you interest based on the time it has the $ as well as the amount.

NBA replied that they calculate the interest based on the lowest balance in the quarter. In the above example, the lowest balance in the quarter would be $1,000, so you would get $1,000 x (91/365) x 3% - period. Does that sound right? Or is it a case of people being robbed by the pen rather than the gun?

And now, a song sung by, inter alia, Pete Seeger:

The Banks are Made of Marble

A Song by Les Rice

I've traveled round this country
From shore to shining shore
It really made me wonder
The things I heard and saw.

I saw the weary farmer
Plowing sod and loam
l heard the auction hammer
A knocking down his home.

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the farmer sweated for.

l saw the seaman standing
Idly by the shore
l heard the bosses saying
Got no work for you no more.

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the seaman sweated for.

I saw the weary miner
Scrubbing coal dust from his back
I heard his children cryin
Got no coal to heat the shack.

But the banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the miner sweated for.

I've seen my brothers working
Throughout this mighty land
l prayed we'd get together
And together make a stand.

Final Chorus
Then we'd own those banks of marble
With a guard at every door
And we'd share those vaults of silver
That we have sweated for.

What about you? Do you think the banks are taking advantage by calculating interest based on the lowest balance, even if only for one day? I believe that the banks pay interest by the month. They would pay on the lowest balance in the account for the month, not the quarter, as suggested above. If I deposited $500,000 on 2 April and paid it out on 30 May the bank would have had my money for two months of April and May, less two days. But, they would not pay me any interest, as neither was a full calendar month? Perhaps, someone at one of the banks can tell us the rationale. I had enquired of NBA several days ago. Someone had promised a response. None arrived up to the date of publication.


  1. From the time you deposit money in a bank it should be accumulating interest on a day basis. At least that's the way my bank does. However, there is a bank in China called the Industrial and Commercial bank of China that was sued by a depositer for not caluculating interest on a day basis. Rather the bank was using a 30-day month rate. All the other banks were giving per day interest. A look at NBA website clearly states that they calculate interest on personal savings accoutns by the quarter. Perhaps not all banks do it that way in Anguilla and customers should know. If there is another bank that's more competititve, then the customer should take their money elsewhere. It would be good to know the policy of other banks on the island.

    The banks in AXA are regulated by the Eastern Caribbean Central Bank and not by the Financial Services Commission? What are their policy relating to how interest is calculating on a loan or a deposit? I would not be amaze if it's left up to individual banks to set their own interests policy. Hence NBA may have room do whatever it wants. Who is looking out for the consumers in AXA? Many of the consumers are more educated and enlightened and will be demanding more answers from the bank officials.

    Banks that calcullate interest by quarter on AXA appears to be: NBA, CCB

    Scotia Bank has daily interest savings accounts. I would suggest the customers view the various banks' wesbites or visit the local bank and find out. Whichever bank is more competitive then take your business there. But be careful because while you may get a better interest rate, some banks may charge base on minimum balance or how many transactions you make.

  2. Thats how NBA makes money they could throw away in expeditions like ANTIL

  3. I used to tranfer funds between savings and checking account per phone. free and simple and fast. That abruptly stopped when we got this debit card. Now i can only go to the bank (no option, have you been lately, it takes a morning) or transfer funds online.Off to the library to use their PC.
    So here goes, I write cheques and towards the end of the month, I get overdraft-charges out of this world: 7.50, 15, 32.50 per cheque. It really is out of proportion. Which reminds me, let me check my accounts,
    keep up the good work.


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