Ideas for the Mambu Banking Engine

Option to waive interest on revolving loans if principal repaid in a specified time frame

What

An option to waive accrued/applied interest on revolving credit loans if principal is received after X number of days, or by a specified date.

 

Why

Credit card companies typically waive interest (fully or partially) if the principal balance is repaid by a certain point in time.

For example, it could be that interest is waived if the principal is repaid before the regular repayment day. If this is the 30th of every month, a customer draws out (spends) €500 on the 5th, but repays it in its entirety on the 20th, the 15 days' interest will be waived and the customer will not be expected to pay anything on the 30th.

Another example could be that the customer is not expected to pay any interest if all principal is repaid within 20 days. If we consider the above example again, the customer will not be expected to pay interest if the €500 drawn on the 5th is repaid before the 25th.

This should be presented as an option because, although it may be a common practice with credit cards, other revolving products such as loans could function differently, whereby interest is always expected to be repaid.

  • James Anderson
  • Apr 4 2018
  • Planned
  • Attach files
  • JM Imperial commented
    10 Apr, 2018 05:25am

    Hi James,

     In regards with the partial waiving, in scenarios like this:

     

    A customer is has a billing date every 28 of the month, and has 15 days to pay.

     

    Lets say it February 28 is the billing date and March 15 is the due date (our current set-up is 15 days arrears tolerance). In case the customer draws on Feb 15 of 500 (this is due on March 15) and March 5 of another 500  (this is due on April 15). Would it be possible if the customer pays on March 13, to waive the accrued interest only for the due accounts for March 15 and retain the ones for April 15?

    Thank you!