3.3 Interest Calculation Methods

This topic describes the information about the Interest Calculation Methods.

Interest on pool participants can be calculated in the following ways:

• Replacement Interest Payment Method / Interest Method - The system will have interest suppressed at the participant accounts and will make a single payment/charge as required based on the pool header balance.
• Advantage Method - Interest is initially calculated without taking the pooling arrangement into account and then a rebate is paid to the group.
• Ratio Method – Interest is calculated at the individual participant account based on the net pool position and to the extent each participant account’s balance covers the debit & credit portion of the pooled balance.

This topic contains the following subtopics:

• Interest Method
  This topic provides the information about the Interest method for Interest calculation.
• Advantage Method
  This topic provides the information about the Advantage method for Interest calculation.
• Ratio Method
  This topic provides the information about the Ratio method for Interest calculation.