Formulas and Calculations

Average Collected Balance

The Average Collected Balance is the average daily balance less any check hold amounts. This balance is used to calculate the investable balance amount to be used in the earnings credit allowance calculation.

Average Daily Balance - Average Check Holds = Average Collected Balance

Investable Balance

The Investable Balance is the balance available to calculate the earnings credit allowance against after considering the balance required to be retained for reserve requirements.

Average Collected Balance - (Average Collected Balance * Reserve Rate) = Investable Balance

Example: Assuming Reserve Rate is 10.00%.

57,331.67 - (57,331.67 * 10.00) = 51,598.50

Earnings Credit Allowance

The Earnings Credit Allowance is the credit given to the member for maintaining balances to support the costs of services.

((Investable Balance * Earnings Rate) ÷ 365 or 366) * Number of Days in Month = Earnings Credit Allowance

Example: Assuming Earning Rate is.85%.

((57,331.67 * .85) / 365) * 30 days = 36.048 round up to 36.05

Cost of Service

The Cost of Service is the unit price times the number of times the service is used.

Quantity * Unit Price = Cost of Service

Total Balance Required

The Total Balance Required is the balance required to support the total costs of the services provided.

Balance Required Per Unit

The Balance Required Per Unit is the balance required per use of the service provided to avoid the fee assessment.

Cost (Unit Price * Tiered Pricing Structure) / # days in a month * # days in a year / Earnings Credit Rate / 100% - Reserve Requirement