Debit interest

Legal information 

Under certain circumstances your account statement may show a negative interest figure. In most cases this is related to the fact that banks use a technique for calculating interest based on "value dates".


Each entry on a bank statement carries at least two dates:

• the accounting date ‑ corresponding to the date on which a transaction is carried out, and
• the value date ‑ which corresponds to the date as of which interest is either credited or debited to the account.

With respect to the buying or selling of securities, the gap between the accounting date and the value date can vary between 2 to 3 days and in effect represents the time necessary for the completion of the transaction(s) on the market(s).

In fact there is a delay between the moment a security is bought (or sold) on a market and the moment it is actually booked by the bank which has conducted the transaction.

Thus, a security bought or sold today ‑ with an accounting date of today's date ‑ is not actually booked into (or out of) the respective accounts until a later value date (+2 or +3 days).

In the case of a sale of securities, Swissquote Bank allows you immediate access to the proceeds of that sale ‑ either for reinvestment or for payment transactions. It has to be borne in mind, however, that using funds in this way before the actual value date may result in an account being in the red for one or more days, without this being visible for the client.

Example

The following example illustrates the issue:

On December 10, 2007 the balance of your accounts stands at zero.

You sell 1000 XYZ at CHF 70.00 on December 10, 2007, generating proceeds of CHF 70,000.

The accounting date is December 10, 2007.

The value date will be December 13, 2007.

The same day, i.e. December 10, you decide to use the proceeds of the sale for an urgent payment with a value date of the following day (December 11, 2007).

Given that the value date of the sale will be two days later, your account will show a debit balance of CHF 70,000 for two days. This negative position will generate debit interest.

 

Conclusion

Interest charges may also apply in other situations such as, notably, temporary negative cash positions. Such situations may occur if you have consciously decided to manage your forex reconciliation yourself and have configured your profile accordingly (My profile ‑ My account options). In this case, we recommend that you check the configuration of your profile.

Got further questions?

If you didn’t find the information you were looking for or you still have questions, check out other Help categories.

Be in the know

Sign up to our newsletter and receive a monthly selection right in your inbox


Sponsors
Europa LeagueGenève ServetteZSC Lions

Be aware of the risk

Trading foreign exchange, spot precious metals and any other product on the Forex platform involves significant risk of loss and may not be suitable for all investors. Prior to opening an account with Swissquote, consider your level of experience, investment objectives, assets, income and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not speculate, invest or hedge with capital you cannot afford to lose, that is borrowed or urgently needed or necessary for personal or family subsistence. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. The content of this website represents advertising material and has not been submitted to nor approved by any supervisory authority.