Date: Tue, 31 Jul 2001 20:42:14 -0400
From: Jonathan Kamens <jik@kamens.brookline.ma.us>
To: cgaffney@pfsb.com
Subject: How Peoples calculates interest

Mr. Gaffney,

I am trying to determine the precise algorithm used by Peoples to
calculate the interest to be paid on interest-bearing accounts.  I
have guessed at several different algorithms and run my monthly
statements through them, but none of my guesses has yielded the
correct results.

I am hoping that you can describe to me exactly how my interest
payments are calculated.  As a bank customer, I am entitled to a
description that is detailed enough that I can use it to confirm the
accuracy of your interest calculations.

Furthermore, I have some particular questions about this topic.  The
answers to these questions might shed some light on why I have been
unable to determine through empirical observation what algorithm you
use:

* Before the computer upgrade, there were two interest amounts on each
  of my statements -- an interest credit transaction and an "interest
  earned" amount.  These two amounts were rarely the same.  For
  example, on the May 31, 2001 statement for my money market account,
  I was credit 13.35 in interest on May 31, but the "interest earned"
  amount was 13.36.  Why do these two amounts differ?  What does th
  "interest earned" amount represent?

* Before the computer upgrade, the annual percentage yield listed for
  my money market accounts was 2.93% However, my first statement after
  the upgrade says that the APY is 3.83%.  Why are these two numbers
  different, and how was each of them calculated?

* On the April 30, 2001 statement for my money market account, I wa
  created 13.08 in interest on April 28 "for period ending 4/30/01".
  How could I have been credited interest for a date in the future?
  I.e., how was that interest amount calculated, if you didn't know
  when it was calculated what my daily balances would be on April 29
  and 30?

I hope that you can clarify these issues for me.

Sincerely,

  Jonathan Kamens