Where interest is paid

An account either keeps its interest or pays it away. An account that keeps it adds the interest to its own balance — see compounding and capitalisation. An account that pays it away needs somewhere to send it, and that destination is held on the account.

The two destinations

You pick the destination and the account as one field, and the list shows both kinds together. An internal destination raises no payment, so nothing clears and nothing is charged for the transfer.

Where the interest does leave as a payment, the speed and the scheme are decided for you — see how a payment picks its rail.

Which accounts you can choose

The bank accounts on offer are the ones already recorded for the customer, in the account’s currency.

The accounts held with you are narrower. An account is offered only when all of this is true:

• The same customer owns both accounts. See which accounts a counterparty holds.
• Both are in the same currency.
• Both are held in the same operating entity.
• The receiving account is active, and its product accepts transfers in.

An account that fails any of these never appears in the list, so you cannot nominate a destination the payment could not reach.

Changing the destination

Select Change Interest Payment Account.

It is offered only while the account’s interest mode is Pay. An account that capitalises has no destination to change, so the action shows as unavailable and says why. Switching between capitalising and paying away is a different action, and that one takes effect straight away.

This change is forward value-dated. You name the date it takes effect and it waits there until the date arrives — see value dating. It also needs a countersignature, because it changes where the customer’s money is going. That is the same shape as changing the maturity destination — see maturity instructions.

Whether these changes need a countersignature is your organisation’s choice, as is which products pay interest away at all.

If the destination cannot be used

A destination is read again on the day the interest falls due, not on the day you entered it. If it is missing or unusable by then, the interest is not sent. Nothing falls back to another account, because paying an account nobody nominated is worse than not paying at all. The reason is recorded against the account.

What is left behind depends on the product:

• Where the interest is capitalised first and then paid away, the capitalisation stands and only the payment is held back.
• Where the payment is the whole step, nothing posts at all and the interest stays accrued.

Either way, the money is still the customer’s. Fix the destination and the next run pays it.

Worked example

Alex holds a deposit with a balance of 100,000 and 750 of interest accrued. The account pays its interest away.