Changing Interest Rates on Active Deposit Accounts
  • 27 Sep 2022
  • 6 Minutes To Read
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Changing Interest Rates on Active Deposit Accounts

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Clients with deposit accounts can either receive credit interest for the amount they save, or they can be charged debit interest if their accounts go into overdraft.

Credit interest rates

Credit interest is the interest you owe your clients for the amount they keep in your bank or financial institution.

Product level changes

When you change the interest rate at product level, the change will apply to all deposit accounts using that product.

If you are making a change using the Mambu web app, you will be prompted to select whether this change should apply to either all existing and new accounts or to new accounts only and may have to confirm the change by entering your password, depending on the security settings configured for your organization.

The change will be applied the next time the end of day processes are run.

Please be Aware

Changing the interest rate in the middle of the period affects existing accruals.

If you change the interest rate interest at product level in the middle of the period, Mambu will recalculate existing accruals from the date when the interest has been applied last time. If the interest has never been applied, Mambu will recalculate interest acrrued from the activation date. Therefore, we recommend you change the interest rate on the same date as the interest application, or to use the /changeInterestRate API endpoint for changing fixed rates at the account level instead. If you encounter any issues with this behaviour, please contact Mambu Support Team.

Interest Rate Terms Availability Impact on Accruals
Fixed Interest Rate Will be recalculated with a new rate from the last interest application date.
Index Interest Rate
Tiered per Bands Will be recalculated with a new rate from the last interest application date.
Tiered per Balance Will be recalculated with a new rate from the last interest application date.
Tiered per Period Will be recalculated with a new rate from the last interest application date.

Account level changes

Interest Rate Terms Availability Impact on Accruals Notes
Fixed Interest Rate
via API only
Accruals will be recalculated from the value date.
  • can be backdated
  • cannot be post dated
  • Index Interest Rate N/A N/A
    Tiered per Bands N/A N/A
    Tiered per Balance N/A N/A
    Tiered per Period N/A N/A

    Credit interest rate updates

    Fixed interest rates

    The interest rate at the account level is set, and remains fixed unless renegotiated or personalised for the client. To make changes via the API, make the following call:

    POST /deposits/{depositAccountId}:changeInterestRate
    

    With this endpoint, you can increase or decrease credit interest rates on individual Current, Savings and Fixed Deposit accounts within the product constraints.

    You can specify a new interest rate within the defined product constraints using the field interestRate and supplying the value date or date on which you want the change to be applied in an API body such as below:

    {
      "interestRate": 1.2,
      "notes": "Rewarding client for loyalty.",
      "valueDate": "2020-04-26"
    }
    

    Once executed, a non-financial transaction "Interest Rate Changed" will be logged in the transaction history of the account with the new rate.

    When changing interest rates on individual deposit accounts, previously accrued interest will not be applied, it will be recalculated from the value date with the new credit interest rate. Mambu simply continues to accrue interest based on the rate and valueDate provided in the API call.

    To retrieve all Interest Rate Change transactions, make the following API call:

    GET /deposits/{accountIdentifier}/transactions
    

    For more information, see Deposits - Change Interest Rate in our API Reference.

    Index interest rates

    Changing the interest spread on credit index interest rates is not possible. For updates, please follow our release notes.

    Tiered per Balance, Tiered per Period, and Tiered per Band interest rates

    To change the interest rate at product level:

    1. Open the deposit account.
    2. On the right-hand side of the screen, select More > Edit account.
    3. In the Editing deposit account form, under Product, take a note of the deposit product used to create the account.
    4. Go to Administration > Products > Deposits.
    5. In the list of deposit products, find the one you want to edit and select Actions > Edit.
    6. Make changes to the tiered interest rates.
    7. Select Save Product.
    8. Before confirming, choose if you want your changes to apply to All existing and new accounts or to New accounts only.

    Confirm changes dialog where you can specify if you want your changes to apply to all existing and new accounts or To new accounts only

    Warning!

    If you change the interest rate at the product level and you apply the change to existing accounts that had interest rate set to 0 (no interest applied transaction) and then update it to a higher value, Mambu will apply the new interest rate starting from the account activation date.

    To change the interest rate via API, use the POST /depositproducts/{depositProductId}:batchUpdate endpoint. For more information, see Deposit Products - Batch Update in our API Reference.

    All accrued interest will be re-calculated at the new rate starting from the next day.

    If an account has $20 of accrued interest, and the interest rate increases, then the amount of accrued interest will increase.

    When the interest is applied, the total amount of interest for the period is calculated as the sum of the daily interest calculated as above using daily interest, truncated to 20 decimal places. For more information, see Truncating and rounding interest.

    Mambu allows for changing the interest rate at the account level only using positive interest rates. The Tiered Per Bands method supports negative rates. Negative interest rates is an Early Access feature and does not allow interest changes.

    Early Access Feature
    If you would like to request early access to this feature, please get in touch with your Mambu Customer Success Manager to discuss your requirements. For more information, see Mambu Release Cycle - Feature Release Status.

    Debit interest rates

    Debit interest is the interest your clients owe you for the use of an overdraft facility, expressed as an annual percentage of the amount the client is overdrawn.

    Product level changes

    When you change the debit interest rate at the product level, the change will apply only to all new deposit accounts created under that product and not to any existing accounts. To update the debit interest rate for existing accounts, use the PATCH /savings/{savingsAccountId} endpoint in our API v1. For more information, see Savings accounts -Edit existing savings account. There will be no transaction booked for the change of interest rate, but you would see the new rate updated in the Details tab of the Mambu web app.

    Interest Rate Terms Availability Impact on Accruals
    Fixed Interest Rate Will be applicable only to the new accounts.
    Index Interest Rate N/A
    Tiered per Balance Will be applicable only to the new accounts.

    Account level changes

    Interest Rate Terms Availability Impact on Accruals Notes
    Fixed Interest Rate
    via UI and API
    Will be recalculated with a new rate from the last interest application date.
    Index Interest Rate
    via UI or API
    Spread can be updated. Accruals will be recalculated from the day of the change. Specific values for the index rate source can be managed under Administration > Financial Setup > Rates. For more information, see Customizing Index Rates. Cannot be backdated or post dated.

    Debit interest rate updates

    To change the debit interest rate at account level:

    1. Open the loan account.
    2. On the right-hand side of the screen, select More > Adjust Overdraft Terms.
    3. In the Adjust Overdraft Terms dialog, under Interest Rate, update the interest rate.
    4. Select Save Changes.

    Adjust overdraft terms dialogue with overdraft limit, interest rate, expiry date, and notes fields

    Backdating interest rate changes

    You can backdate credit interest rate changes on active accounts via API only. The same conditions apply as for the regular changes presented above.

    You can backdate interest rate changes on individual Current, Savings and Fixed Deposit accounts by making a request to the POST /deposits/{depositAccountId}:changeInterestRate endpoint. For more information, see Deposits - Change Interest Rate in our API Reference.

    Simply set a valueDate in the past and therefore backdate interest rate changes.

    {
      "interestRate": 1.2,
      "notes": "Rewarding client for loyalty.",
      "valueDate": "2020-03-26"
    }
    

    Once executed, a non-financial transaction "Interest Rate Changed" will be logged in the transaction history of the account.

    Retrieve all Interest Rate Changed transactions via

    GET /deposits/{accountIdentifier}/transactions
    

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