Conference 7.286::dcu

Have your weekly transaction go to a holding account, then schedule a monthly
payment transaction from the holding account.

			Steve

    That explains "what to do" but I'd like to know "why".
    
    So is what you're saying that my total monthly interest is the same
    as it would be if I had made monthly payments?
    
    I wouldn't have thought so because some months you have 5 payments
    and some you have 4 but the interest part always seems to be about
    the same
    
    ???

For loans other than first mortgages, the interest payment is calculated
on a daily basis.

Therefore, the interest portion  for next week will be slight less
than this week assuming fixed weekly payment (since you've
paid down the amount owed.)

I would be surprised if Quicken has ability to track balances on a daily basis.

Interest on first mortgages, on the other hand, are not calculated
on a daily basis. By that I mean it does not matter whether you pay 
the mortgage on the due date or a week earlier.  

Gim

>I would be surprised if Quicken has ability to track balances on a daily basis.

    Quicken has the ability to compute interest on any arbitrary period,
    but if you want an automated transaction, I believe the period
    of interest must be the same as the period of payments.
    
    I.E. you can't have a weekly automated loan transaction for a 
    loan with daily interest although you could schedule a daily
    transfer ala Steve's suggestion.
    
    Not worth it. I'd rather not have the clutter of 30 transactions
    every month.
    
    Bottom line is that I'll second the suggestion that DCU compute loan
    interest using a more standard method.
    
	db

Gim,

There is a standard formula for computing the portion of a payment which 
goes to principal vs. interest for any payment interval.  Exactly how does
DCU do the calculation?  What difference should daily vs. weekly
computation make for weekly payments?

			Steve

    re: .5
    
    The standard formula applies only for certain class of loans.  One loan
    type that follows this standard formula is the first mortgage.  
    As I mentioned before, for mortgages, the split between principal 
    vs interest for a given month's payment is predetermined
    and can be calculated via a standard formula. You will also note
    that it doesn't make any difference when that payment is made - as long
    as you make it before the due date. For example if you paid half of the
    monthly payment 3 weeks before the payment date and the second half on
    the payment, the split between interest and principal would remain
    unchanged.  In this case, there is no advantage to paying early. You
    should pay as close to the due date as possible.
    
    My understanding is that for other types of loans at the DCU,
    auto loans, as an example, interest is calculated on average daily
    balance basis. Therefore if you make payments earlier, it reduces you
    average balance for the month and therefore more money would go
    told the principal.  
    
    If you like, I can dig into this in more detail.
    
    Gim
    
      

> I would be surprised if Quicken has ability to track balances on a daily
> basis.
> 
>     Quicken has the ability to compute interest on any arbitrary period,
>     but if you want an automated transaction, I believe the period
>     of interest must be the same as the period of payments.

That is exactly the point. Any personal finance package should be
able to compute the interest split for any arbitrary period if
provided the interest rate, daily balance and the payment date.

You are providing the daily balance, for a credit card, by entering
the purchases made each day.

I have yet to see a package that does the above.  I do expect that
Quicken will be the first to do it.

Gim

    

    Gim,
    
    I think one of us is confused.  It could be me but...
    
    When I said "Quicken has the ability to compute interest on any
    arbitrary period", I did not mean "it has everything it would need
    to know to do that", I mean't it has THAT feature right now.
    
    I believe the specific problem is that it can't compute loan interest
    for loans where the interest period is different from the payment
    period.
    
    I'm far from sure about that though.   I'll try to remember to check
    this weekend.
    
    	db

    
    I'm confused by the average daily balance.
    
    Lets say I make a payemnet on Thursday Feb 25, and the balance
    on the loan after the transaction, is $10,250.  Over the course of the
    next week, before I make my next Thursdays payment, isn't the average 
    daily balance $10,250, or has daily interest been getting added into
    the balance?  
    
    Based on my experience with my quicken dcu loan account, the DCU
    reported interest paid on the next payment would not be 1/52 of
    my interest rate * 10,250 (the way quicken does it).  It would be 
    slightly more interest than that.
    
    GIM, is right about quicken.  I don't see a way to make it compute 
    interest on an average daily balance.
    
    
    

The key is that these DCU loans are using "simple interest" rather than
amortization.  I don't know if Quicken can do a simple interest loan.

				Steve

    re: .9
    
    You should contact the DCU directly with this question. Though I am a
    board member, I do not know the details of the interest calculation.
    
    My understanding, and I may be wrong, is that the balance for each day
    of the month are summed and then divided by the number of days to
    arrive at the average daily balance. The interest = 
    	average balance x number of days in the month x interest/365.
    
    So, in your case, interest isn't added until the end of the period.
    
    Gim