Posted by John Behle on March 23, 2002 at 18:05:08:
In Reply to: Support for Your posted by Teresa K. Baty on March 18, 2002 at 13:24:54:
I'm not aware of any case law or anything else. Interest and compounding is annual unless specified differently. Usually the documents are clear.
If it says 10% annual interest, it is clear. If it says 10% interest and leaves out anything about being annual, it would be extremely rare, but would be interpreted as annual. To compound the interest quarterly or monthly, the documents must say that. If it says 10% simple interest, there is no compounding at all.
No bank, individual or institution has a right to compound differently than the documents (agreement) says. A note is a legal contract and no bank or individual's policy changes that, no matter how convenient it might be for them or how much they would like to.
Sometimes the issue just comes down to having some minimum wage employee that doesn't even know how to work a calculator doing the figures. Pointing it out usually changes it. Sometimes it makes little difference - sometimes a lot. I have had at times to spend several hours and fax documents and even be very blunt or threatening to clear it up, but for thousands of dollars, I will do that.