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## 3.4 Interest Calculation Methods

This topic describes the information about the Interest Calculation Methods.

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

- 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 sub-topics:

- 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.

Parent topic: Notional Pooling