Anatocism: what it is and how to calculate it
In the banking sector, the mechanisms that determine the accrual of interest with respect to a given capital, they play a role of great importance, as they can materialize in various areas. As a rule, the capitalization (i.e. the production of interest) concerns only the sums received on credit for, for example, a mortgage or a loan. In some cases, it is possible that a similar mechanism also applies to the interest itself, if it has expired for at least six months. In situations of this type, we speak of anatocism: in this article, we see what it is and how it is calculated for the quantification of interest rates.
Anatocism: the reference legislation
The legislation that regulates theanatocism is based primarily onarticle no. 1283 of the civil code; the device establishes the following: “in the absence of contrary uses, overdue interest can produce interest only from the day of the judicial request or as a result of an agreement subsequent to its expiry, and provided that it is interest due at least for six months”.
In essence, the civil code lists the three conditions, upon the occurrence of which, the accrual of compound interest it is lawful: in the absence of contrary uses, or in the absence of specific regulatory provisions that exclude the possibility, in the case in question, of accruing anatocistic interests; in the presence of a “judicial request”, that is a judicial act by means of which the interested party asks the judge to collect the interest due to him; the interest is due for at least six months, ie it has expired for at least six months.
In summary, the interest due can be further capitalized (i.e. to produce other interest) only after six months from the expiry, in the absence of contrary regulations and only after the judicial request by the creditor. In reality, in the matter of anatocistic interests, the evolution of the legislation outside the Civil Code has been rather complex and tortuous; in 1999, the so-called “bank-safe decree“(Legislative Decree 4 August 1999, no. 342) has equated the capitalization of interest income and expense, introducing a transitional rule which was later declared unconstitutional. The following year, the decree-law 29 December 2000, n. 394 provided an “authentic interpretation of the law of 7 March 1996, n. 108, containing provisions on usury “, establishing that” interests that exceed the limit established by law at the time in which they are promised or otherwise agreed, for any reason, regardless of the time of their payment, are considered usurious. “
The anatocistic interests, in fact, are closely linked to the concept of usury, a criminally relevant conduct pursuant to article 644 of the criminal code. Since applied to interest already expired, compound interest determines an exponential growth of the debt; if interest rates exceed a certain threshold, they can constitute a usury crime. In this regard, it should be emphasized that the usury requirement is quantified by the Department of the Treasury (pursuant to Law No. 108 of 7 March 1996) on the basis of quarterly surveys of the global effective rate applied by banks and other authorized financial intermediaries.
How the anatocystic rate is calculated
To calculate the compound interest rates (on past interest due) it is possible to rely on a specialized portal such as www.calcoloanatocismousura.it, which uses a special calculation software. It is an important protection tool for those who find themselves paying additional interest on those already overdue and are afraid of being victim of usury. The use of specific calculation tools is certainly a faster and more effective option than manual calculation, which requires the application of the following formula: IA = (1 + TN / n) ^ n -1.
Within this formula, [IA] represents the compound interest, [TN] is the anatocystic rate e [n] is the number of times interest is compounded over the reference time period.
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