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How is the reserve balance calculated?

Last updated on July 31, 2020

We calculate the reserve balance for the current day as a percentage of the sum of all charges in the period starting five (5) months prior to the start of the current month and ending the previous full day. This means that the maximum time for a transaction to be considered in the calculation for the reserve balance is just less than six (6) months. The percentage, also known as the reserve ratio, is specific to your account.

Examples

If today is 16 July and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from February through June plus the charges during 1-15 July.

Month	February	March	April	May	June	July (1-15)
Charge total	100	100	100	100	100	50

For the above monthly charge totals, the calculation is

(100 + 100 + 100 + 100 + 100 + 50) * 0.10 = 55

If today is 31 July and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from February through June plus the charges during 1-30 July.

Month	February	March	April	May	June	July (1-30)
Charge total	100	100	100	100	100	95

For the above monthly charge totals, the calculation is

(100 + 100 + 100 + 100 + 100 + 95) * 0.10 = 59.5 # converts to 59

We remove the decimal component to get 59 for the final reserve amount.

If today is 1 August and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from March through the end of July.

Month	March	April	May	June	July
Charge total	100	100	100	100	100

(100 + 100 + 100 + 100 + 100) * 0.10 = 50

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