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Simple Interest Method for LOCs

Question: 
We have several consumer LOCs where the note states average daily balance is calculated using the simple interest method. Our system charged interest on interest. What steps do we take to correct?
Answer: 

Randy Carey

Refund the overcharges.

Answer: 

Richard Insley

Refund, yes, but first bring counsel into the decision-making. Whenever you do a remediation resulting from your breach of a contract, you need to be 100% sure that you will do enough or the right thing for far enough back into the account's history. Since the legality of your contract language, rates of interest, and accrual method are a matter of state law, you should get your attorney to review everything and advise you how best to accomplish a full remediation.

First published on 05/25/2015

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