What is interest?
Interest is money that you earn on your funds that you hold with Griffin. It is based on the amount of money you hold with us and the interest rate on the account that holds the funds.
Note that when your customers hold funds with Griffin, they are the ones that earn the interest. However, you may earn commission on your customer’s funds held at Griffin. This is calculated separately.
We pay interest on an accrual basis. That means that we calculate how much interest you earn each day, but we only pay it to you (capitalise it) monthly.
How do we calculate interest?
We set a gross interest rate for each account type in our system. Initially, this is the rate in your contract with us, but we will update our rates from time to time (we’ll always let you know about this). That gross rate is then converted into a daily accrual rate.
We use actual/365_fixed methodology to calculate the daily accrual rate. In other words, your daily accrual rate = gross rate / 365. This means you’ll get the same interest rate each day, and earn more interest in longer months and less interest in shorter months.
The daily rate is applied to your balance at our end of day cut-off, which is currently 17:00 UK time. You won't see daily accrual transactions; interest is only visible when it is paid to you at the end of the month.
If you transfer funds into Griffin after 17:00 on any given day, they won’t accrue any interest until the next day.
Rounding
At Griffin, we always accrue interest in whole pennies and pounds. When we need to round amounts (in case of fractions of a penny), we round off to the nearest whole penny. For example, £12.434 would get rounded down to £12.43 while £12.436 would get rounded up to £12.44. In case of a tie, i.e exactly 0.5 pennies, we round off to the nearest "even penny." This is commonly called bankers' rounding. So, £12.435 would get rounded up to £12.44, but £12.425 would get rounded down to £12.42. In all cases of rounding, we save the fractional penny amounts as a "carry" amount. We add the carried over amount to the accrual for the next day, and the same rounding process is applied.
When do we pay interest?
At the end of each month, once all accruals are complete, we pay the interest into your bank account. You should see this transaction after midnight on the first of the month (e.g. on 1st June you'll receive your interest income for May). If you have multiple accounts with Griffin you will see multiple interest payments at the start of each month, one for each account.
For safeguarding accounts, we don't pay interest into the same account, as this would constitute co-mingling of funds. Instead, we'll pay any interest accrued on safeguarded funds into your primary account
What happens if I close an account?
When you, or one of your customers, wants to close an account we will pay out all of the interest earned so far that month. The account will stop accruing further interest while you empty it, at which point we will permanently close it.
For more information, see our guide on closing accounts