Wesbank escalation woes

[jUgg3rnAut]

Good day

Has anyone been seeing "escalation" amounts on their Wesbank accounts after each prime lending rate increase? If so, does anyone know how this is calculated? The amounts being charged on my account seem a little excessive, but it could also be that I just don't understand the calculation. Wesbank was in touch with me and tried explaining it to me and even sent me a Word doc with the calculation, but they only included the normal interest rate calculation and not the escalation amount calculation. They also do not seem very fond of responding to emails again after they have "helped" me.

Below are the amounts for September of this year on my account and the part that I am struggling to calculate is the escalation amount of R4,394.16. This was when the last increase of 75 basis points occurred which took the rate from 9% to 9.75%. Any ideas on how this was calculated and does it look right?

 

[Sinbad]

The escalation is the increase in the total outstanding balance (capital plus interest) for the remaining duration of your contract based on the interest rate rise. When rates drop, the opposite happens.

 

[jUgg3rnAut]

The escalation is the increase in the total outstanding balance (capital plus interest) for the remaining duration of your contract based on the interest rate rise. When rates drop, the opposite happens.

Yes I understand that. So would it be R233, 448.70 * 9.75% / remainder of contract? Using this calculation I get around R4800. Close, but no cigar. I also would've imagined that I only need to add 0.75% to the total outstanding balance, not the full 9.75%.

 

[Old_Liver]

Yes I understand that. So would it be R233, 448.70 * 9.75% / remainder of contract? Using this calculation I get around R4800. Close, but no cigar. I also would've imagined that I only need to add 0.75% to the total outstanding balance, not the full 9.75%.

You need to understand compound interest. You don't say what term you have left, but assuming about 2.5 years.
Here is an example:

 

[A3@MBB]

Yes I understand that. So would it be R233, 448.70 * 9.75% / remainder of contract? Using this calculation I get around R4800. Close, but no cigar. I also would've imagined that I only need to add 0.75% to the total outstanding balance, not the full 9.75%.

No, the R233 448.70 already includes interest levied at the old rate.
You would need to use the outstanding capital amount and calculate the 0.75% thereon for the full term remaining.