Calculation methods
Flat and tiered interest rates
Understand flat and tiered rate structures used by an interest pool.
Written by Katrin Erb Updated Published An interest profile defines the effective rate used for accounts in an interest pool. It can contain one flat rate or several balance tiers.
Flat rate
A flat profile has one tier with a lower limit of zero. The same rate applies at every positive account balance.
Example: with a flat rate of 1.50%, an illustrative balance of GBP 2,000,000 has annualised gross interest of:
GBP 2,000,000 × 1.50% = GBP 30,000
Tiered rates
A tiered profile has several lower limits. The account balance determines which tiers are used.
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GBP 0: 1.00%
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GBP 1,000,000: 1.50%
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GBP 5,000,000: 2.00%
The profile's tiering method determines how those rates apply:
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Whole balance: the rate from the tier reached by the balance applies to the full balance.
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Partial balance: each rate applies only to the portion of the balance within its tier.
How Flinq uses the rate
The interest profile belongs to an interest pool, so its periods apply to eligible accounts while they are assigned to that pool. The calculation also uses the period's day-count convention and the number of days included.
Non-positive balances and the pool's management account do not earn client interest. If a standing-rate profile is configured, Flinq can apply it as a floor to the client net return.
Changing rates
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