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  2. Interest & Rate Mechanics

Customer Interest Accruals

Customer Interest Accruals represent the daily recording of interest earned by Customers before that interest is posted. This process ensures that the Sending Institution accurately accrues Customer Interest on their balance sheet prior to the monthly interest settlement cycle.

Operational Logic

The DDM Program calculates customer interest daily based on the established Customer Interest Rate and the current Customer Account balance.

Reporting

→ See: DDM Reports Guide to learn more about daily customer interest accrual.

Month-End Settlement

Customers earn interest calculated using a simple interest accrual methodology, credited monthly. The interest cycle ends on the last calendar day of every month and does not include any non-business days that follow it.

During Implementation & Onboarding, a Participating Institution can choose to either have customer interest added back to principal (remain on deposit in the Program Accounts at the Receiving Institutions) or paid-out to their Customers.

Added to Principal

If a Participating Institution chooses to have customer interest added to principal, on the last business day of the month, the Participating Institution receives an Interest Posting File, which will post an interest transaction to the Customer's DDM account increasing their principal balance by the interest amount. This amount will remain on deposit in the Program Accounts at the Receiving Institutions.

Paid Out to Customers

If a Participating Institution chooses to have customer interest paid out to their Customers, on the last business day of the month, the client will receive an Interest Posting File, which will post an interest transaction to the Customer's DDM account increasing their principal balance by the interest amount. On the first business day of the month, a process is run in the program where the system automatically withdraws the posted interest amounts. The withdrawn customer interest is then settled as part of that day's net settlement activity.

→ See: Pre-Funded Customer Interest for information regarding mid-month customer interest.

What's Next

Updated 9 days ago

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