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Email this4:34 pm
April 16, 2020
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(I'm raising this thread specifically about EQ Bank, but for reference it follows on from related discussion in an earlier thread under "Income tax filing" originally about the T5 slip for TY2019.)
Since Nov 2019 up to (I think) July this year, the EQ Bank account history webpage has shown that interest for month N is credited on the 1st day of month N+1.
I have recently noticed that :
- the account history webpage behaviour has now changed to show that interest for month N is credited on the last day of month N.
- all past months have also changed to show that interest for month N is credited on the last day of month N.
- however my account statement PDF files continue to show interest payments being credited on 1st day of month N+1, starting from 1st-Nov-2019 up to and including 1st-Sep-2020 so far.
Further observation :
- I have a simple case where I can verify(*) that a deposit to a new account on 9th Aug received 1.7% interest for 22 days "in the month of August" : i.e. credited either 31st Aug or 1st Sep.
(*) in this case, one day of interest is > $1.00, so well above a rounding artifact of < $0.01
- the EQ Savings Plus Account Agreement webpage text states that
"The Account earns interest daily based on the closing balance"
which presumably includes the day-of-deposit; therefore in my example the interest is calculated from 9th Aug inclusive.
- unless I'm losing even more marbles than usual, counting 22 days from 9th Aug inclusive means that 30th Aug is included but 31st Aug is not.
- obviously, in about ten days I will be able to check September's interest calculation, but the August interest amount is too small to show a single day compounding difference : i.e. to be able to determine whether the August interest was actually credited on 31st Aug or 1st Sep.
In the meantime : should I be particularly concerned that the webpage and the PDF files are not consistent in representing the account history ?
Thanks for any opinions (even if it's that I'm too nit-picky for my own good (:^)).
5:18 pm
April 6, 2013
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August 9 is a Sunday which is not a business day. So, your deposit was likely credited August 10, the next business day.
August 10 to August 31, inclusive, is 22 days.
EQ Bank changed how interest is credited on their PDF statements. It looks like they changed it to show interest being credit at the open of the first day of the next month instead of after the close of the last day of the month.
The change is not material. Crediting at the open of the next day is the same as crediting after the close of the previous day when interest is paid on the daily closing balances.
5:20 pm
October 27, 2013
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Why should it be a concern? The way I look at it is that interest was earned for the period Aug 1-31 and credited to your account on Sept 1 on your monthly statement.
It seems perfectly logical to me that interest would actually be credited (deposited) to your account the next day (it wasn't available to you Aug 31 anyway until after midnight).
How it shows up on a T5 could be interesting, but again not anything I would pay attention too. I'd actually prefer December 2020 interest not show up on my 2020 T5 (get an extra year before paying tax on it) but I doubt that is the case.
P.S. I never look at my PDF statement so wasn't even aware this was the case.
5:24 pm
April 6, 2013
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Previous thread EQBank T5 slip Box 13 for TY2019 includes interest credited on 2020-Jan-1st has more details about this and how the interest shows on the T5 slip.
The PDF statements are useful for obtaining the effective dates of transactions. The effective date is used for interest calculation purposes.
In contrast, the web site may show the posting date, which is not always the same.
5:28 pm
October 27, 2013
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As it should be....
6:08 pm
February 27, 2018
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Tangerine may run into the same issue. Their regular interest is paid on the last day of the month, at the rate of 0.15%. Their bonus interest is paid on the first day of the month, at the current rate of 1.65%.
On January 1st 2021, bonus interest will be paid. That amount should be included on the 2021 T5, not on the 2020 T5.
9:31 am
September 6, 2020
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AltaRed said
Why should it be a concern? The way I look at it is that interest was earned for the period Aug 1-31 and credited to your account on Sept 1 on your monthly statement.It seems perfectly logical to me that interest would actually be credited (deposited) to your account the next day (it wasn't available to you Aug 31 anyway until after midnight).
How it shows up on a T5 could be interesting, but again not anything I would pay attention too. I'd actually prefer December 2020 interest not show up on my 2020 T5 (get an extra year before paying tax on it) but I doubt that is the case.
P.S. I never look at my PDF statement so wasn't even aware this was the case.
Shift your GIC purchase dates to January. The interest does not appear until the following year. Once long ago if you purchased a 5 year GIC with re-invested interest the interest did not show until after the 5th year. Rules changed. You had to report the interest every 3 years. 3 years and 2 years. When interest rates were 10%-11% the slip was huge. Eventually you had to report interest accurred but not paid annually.
Have a Great Day
1:35 pm
October 27, 2013
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There is very little difference in time value of, at most, a 1 year deferment in taxes paid. I would think it would be more important to stagger maturity dates (and thus anniversary dates on compound GICs) to smooth out the volatility of changes in interest rates on re-investment dates. That is the point of say, 10 GICs in a 5 year GIC ladder... one maturing every 6 months capturing the interest rate of the day.
3:36 pm
September 6, 2020
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AltaRed said
There is very little difference in time value of, at most, a 1 year deferment in taxes paid. I would think it would be more important to stagger maturity dates (and thus anniversary dates on compound GICs) to smooth out the volatility of changes in interest rates on re-investment dates. That is the point of say, 10 GICs in a 5 year GIC ladder... one maturing every 6 months capturing the interest rate of the day.
Absolutely correct. When interest rates were high it made a difference. 1970's to 1990's and 2000's. With interest rates ZERO no advantage. In fact a couple months ago I started paying my CC when I used it. A very small balance this month as well. Not a bad feeling. In 2002 I said people will not remember seeing 6%+ interest rates.
Have a Great Day
3:39 pm
September 6, 2020
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AltaRed said
There is very little difference in time value of, at most, a 1 year deferment in taxes paid. I would think it would be more important to stagger maturity dates (and thus anniversary dates on compound GICs) to smooth out the volatility of changes in interest rates on re-investment dates. That is the point of say, 10 GICs in a 5 year GIC ladder... one maturing every 6 months capturing the interest rate of the day.
I am building a 5 year ladder with maturity date same time each year. Eventually I will have 5 GIC's. It works.
Have a Great Day
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