(a) Permissible
methods.
(1) Balance on which interest is calculated. Institutions shall calculate interest on the full amount of principal
in an account for each day by use of either the daily balance method
or the average daily balance method. Institutions shall calculate
interest by use of a daily rate of at least 1/365 of the interest
rate. In a leap year a daily rate of 1/366 of the interest rate may
be used.
(2) Determination of minimum balance to earn interest. An institution shall use the same method to determine any minimum
balance required to earn interest as it uses to determine the balance
on which interest is calculated. An institution may use an additional
method that is unequivocally beneficial to the consumer.
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(b) Compounding and crediting policies. This section does not require institutions to compound or credit
interest at any particular frequency.
(c) Date interest begins to accrue. Interest
shall begin to accrue not later than the business day specified for
interest-bearing accounts in section 606 of the Expedited Funds Availability
Act (12 U.S.C. 4005) and in section 229.14 of that act’s implementing
Regulation CC (12 CFR part 229). Interest shall accrue until the day
funds are withdrawn.
