Something to be aware of with "odd-month" GICs | GIC discussions | Discussion forum

Quite right, Norman, it's effectively much worse than not compounding, although that's how they carry out the manoeuvre, by not crediting and not compounding at end of one year.

This situation was true of the 18 month specials offered at Luminus credit union (Toronto) in the first 3 months of this year, for example, an offer which was posted on this forum.

The 15 month GIC at Peoples Trust is OK; it specifies annual compounding.

My info comes from someone who bought the 18 month cashable at 2.35. They said at the time that they would sent him the paper work later as it was the end of the day and they didn't want to take the time to make the copies, but they never came, so he inquired by email as to whether the rate was compounded annually, never imagining that it was only a term rate. He could not get an intelligible answer except to say that the interest would come at the end of the 18 months, so asked how much interest he would receive at that time. They were able to answer this question! It was a simple matter to figure out that this was not an annual rate, but a term rate as it was exactly 2.35% of the principal.

I suppose it's possible that this employee doesn't have it figured out right, but that too would be a red flag if true.

Since this is what he's been told and since it's cashable, he plans to move it elsewhere asap, although it will cost the mandatory $50 probably, as it's an rrsp. I think he'll be glad to get out of there. I feel badly that I recommended it as an option in the first place but am glad I didn't personally invest with them.
I would not do business with them.

I'm glad you have documentation about yours which suggests an annual rate, Koogie. Hang on to that document! It may have been designed for "regular" rates and not updated for their more recent intentions. Who knows? Something is screwy anyway.
My warning stands, as it's always something one should look out for. No telling what they'll think up next!

Yes, he's asking for the original documentation now that I have this new info from Koogie.

I hear what you're saying about the short-term investments. The language really is confusing, now that I think about it, because they do refer to those under one year as term deposits, although we assume the rates are annual when we consider them.

The response so far is that the information is not accessible at this time as it's being microfiched. Microfiched? in this day and age? I'm not a tech person; perhaps this is the way it's done?
They did not offer online access.
Supposed to take about 2 weeks to get past the microfiching stage...

He does have a kind of electronic statement. it might have come by email; I'm not sure, but it is very sparse and doesn't provide the necessary info.

Also, there was no apology for either not giving it to him in the first place or for not having it available or any inconvenience etc.

... which, in turn, followed the Ditto machine, as I recall. Ah, the good old days. I can still smell the toxic scent of those darn things! choke, choke

Norman1 said

Maybe the staff mean "scanning" instead of "microfiching"? Did the friend see one of these microfiche readers in the Luminus branch?

Microfiche is impervious to Internet hackers. No-one can hack in through their Internet connection and grab what's on the microfiche sheets.

She said "microfiche". I saw the email. They must have a reader somewhere. Libraries still have them but it's seen as old tech for sure.

It's great that they are hack-proof, but are they fireproof? Perhaps they keep them in the vault, but I have never seen a microfiche reader in there! I wonder how many copies of the fiche they keep, and where.