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Interest

Overview#

Based on the terms between you, Unit and the bank you are partnered with, you may be entitled to be paid interest for the total amount of funds deposited into your Reserve, Revenue and end customers' accounts. You may share that interest with your end customers, or claim it as revenue. Whatever your decision is, it must be properly disclosed and specified in your end customer terms.

Unit makes the necessary interest calculations for you and distributes the interest once a month, in accordance with the terms that are defined in your legal contracts and set in the your deposit products.

Calculating Interest#

Unit uses the Daily Balance method to calculate interest. This means that interest is calculated and accrued daily based on the end of day balance, but is paid once a month:

The annual percentage yield (APY) is the actual rate of interest earned, taking into account the effect of compounding interest. The APY is calculated in the following manner:

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Only accounts in a positive balance accrue interest

Interest Payment#

At the 1st of each month the interest will be paid out. It will be distributed between your revenue account, your customers deposit account and Unit, according to your contract terms. For your customers, an Interest Transaction will be created, and a transaction.created events will be fired. In your revenue account an InterestShare transaction will be created.

The Interest section of the monthly statement specifies the total interest earned this month, the number of days in the month and the Annual percentage yield earned.

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Note that the interest transaction is only created on 1st of the following month, and so will appear on the consecutive statement (e.g. May's interest transaction will appear on June's statement, while the Interest section of that statement specifies the interest that was accrued in June and will be paid on July 1st).

Sponsored Interest#

Unit allows you to customize the interest rate provided on deposits to create more high-yield products. With sponsored interest, you may offer more compelling and guaranteed rates by offering interest to your customers at a higher rate than what the current bank-offered interest rate is. For example, you may want to offer a "VIP" segment of your customers a higher interest rate than what’s currently provided. With sponsored interest you subsidize the interest for your customers.

If you’re interested in sponsoring interest for your customers, please contact Unit.