Memories of banking halycon days of yore

THE piece “Britain remembers double digit rates” in Friday’s Western Mail reminded me of the halcyon days between 1959 and 1995 when I worked for one of the big four banks (Barclays if you must know).

In the 60s and 70s before the advent of computers, interest on overdrafts and loans was worked out manually using the formula PxTxR divided by 365x100 where P was amount outstanding, T the number of days between a change in the balance and R was the interest rate at a percentage over B of E base rate. The method used was to have a page for each borrowing account in an E (for extract) book which was updated each time the amount changed when the old amount P was multiplied by T in the formula above. At the end of the charging period, the totals were added up and were converted to the amount of interest for the period. The main problem arose when R, the rate, changed due to a change in base rate. Each borrower’s figures then had to be updated with effect from the change of rate and totaled off.

This was a pain when there were a lot of changes of rate as in 1975 when there were 12 (peak rate 12%) and 1976 when there were 14 (peak rate 15%) as the figures for each of the four charging periods had to be amalgamated to arrange for the final interest charge for the period.

It is of interest that between October 15 1979 and July 3 1980, Base rate was a staggering 17% and remained in double figures for most of the 80s.

By the time Barclays decided to give me and most of my peers early retirement in 1995 as they thought we were past our sell by date, interest calculations were done at the push of a button due to computers. They did me a favour as a selling culture was coming in and I did not like selling products I would not buy myself. It gave me the chance of a new career with HM Customs & Excise which I enjoyed but was a conversation stopper. People would ask if I was enjoying retirement and when I told them I was now a VAT man, they were off like shots. Ray Steel St Clears