PC Financial launches 3.1% "new net deposit" promo | Page 2 | Simplii Financial | Discussion forum

Loonie said

Norman1 said
....
I think Tangerine is offering monthly compounding on their offer at the normal (1.3%) rate. This is condition 12 of the Tangerine Bank 3% Fall Savings Sale:

12. All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Additional Interest, will not be treated as a new deposit for subsequently calculating Additional Interest payments.

It just says interest paid, including the Additional Interest that tops the rate up to 3%, into the account won't earn any Additional Interest to top the interest-on-the-interest up to 3%.

To my ears, when it says "All" interest payments are ineligible, that includes the basic rate as well. You seemed to agree with that in your first comment but not in your second, so I am confused.
At best, I find it unclear. Probably it would be best to give them an example by email and see what their calculation works out to.

To the ears, it does sound that way. But, to the eyes there is a difference.

In the offer terms, notice that the phrase is "Additional Interest" with capitalization and not "additional interest". Both "Additional Interest" and "additional interest" sound the same. But, the capitalized phrase has special meaning and refers just to the extra interest to top up the rate to 3%:

4. “Additional Interest” shall be the difference between 3% and the Bank’s standard posted rate of interest payable on Applicable Accounts. For example, if on September 1, 2014, the Bank’s posted rate of interest on Applicable Accounts is 1.30%, the difference between the posted rate and 3% is 1.70%, therefore the Additional Interest rate payable on that date would be 1.70% (3% - 1.30% = 1.70%).

Additional Interest Earned Daily = Net New Deposit Dollars X (0.0170 ÷ 365)

Perhaps you can hear what I see if I replace the special term "Additional Interest" with "Top-up Interest" in condition #12 as follows:

12. All interest payments are ineligible for the purposes of calculating Top-up Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Top-up Interest, will not be treated as a new deposit for subsequently calculating Top-up Interest payments.

gocanada said

I called in to ask about the difference between the way they calculate interest normally (daily) vs with this promotion (average daily closing balance). They did confirm that it is different, and that it works out worse for us. When I attempt to put this into a spreadsheet, it appears to work out the exact same, with the exception of compounding interest. Is there more to it than that?

It will work out to be exactly the same if one's daily closing balance during the promotion never drops below one's balance at the start of the promotion. I suspect there will be a difference in a case like this where some of the daily closing balances drop below the starting balance:

$1,000 Closing balance before start of promotion
$2,000 Promotion Day #1 closing balance
$500 Promotion Day #2 closing balance
$500 Promotion Day #3 closing balance

Average balance is ($2,000 + $500 + $500) ÷ 3 = $1,000. That would result in no additional interest paid under average balance method. Additional interest would only be paid under that method on part of average balance, in this case $0, above the $1,000 starting balance.

Under a daily balance method, there would be

1. a day of additional interest paid for Day #1, when account balance of $2,000 was $1,000 above the $1,000 starting balance, and
2. no additional interest paid for Day #2 and Day #3, when account balance was below the $1,000 starting balance.

Careful about moving around the money between PC Financial acocunts for the PC Financial 3.1% offer.

Condition #4 excludes funds transferred from one Eligible Account to another from the offer:

4. The Offer applies to all net new deposits made during the Enrolment Period to Eligible Accounts, not to exceed ..., and is calculated based on the portion of the Eligible Account’s average daily closing balance during the Offer Period that exceeds the closing balance as at September 5, 2014 (the "Additional Balance"). .... Promotional Interest will not be paid on funds that are transferred from an existing Eligible Account to another existing or new Eligible Account.

Should one be adding money into an Eligible Account during the Enrollment Period (September 6 2014 to September 30 2014), make sure one does it directly into the account. There may be no promotional interest earned if one, let's say, deposits the money first into one's No fee Bank account (one Eligible Account) and then transfers it to one's Interest Plus savings account (another Eligible Account):

Loonie said

I think we pretty much agree now, Norman.
I have to remain suspicious of an institution which can't speak in plainer language! It shouldn't be this hard to know where one is at.

I think it's just their legal department and not the entire Tangerine Bank!

I still find the second part of the sentence is rather odd:

12. All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. ....

It suggests that any interest payments are completely disregarded for determining the eligible daily balances for the offer. Withdrawals certainly won't be disregarded.

So, does that mean any withdrawals will reduce the eligible daily balance for the offer even though the withdrawals may only be of the interest earned?

Hi all,

I spoke with Tangerine and can clarify this for you and provide a bit more information. The interest on your deposit does not earn the bonus interest and does not count towards your daily balance for calculating the bonus interest, but even worse than this: it was suggested that we might take the interest out of the account and put it somewhere else - if we do this they will count that as a withdrawal of principal investment. So, let's say you make $300 in interest each month, and withdraw this. You will then be ineligible for bonus interest on $600 of your originally invested funds.

All withdrawals are deemed to be withdrawals of principal investment first.

This may seem like semantics but for who will be investing large amounts and withdrawing over the 3 month period, this could result in significant loss of interest. So I thought I'd let you all know.

Loonie said

Also, I would be careful in regards to the sentence which starts "to participate in the Offer...". It specifies 3 methods: going through the website offer (which appears to mean making a phone call, as there is no link to sign up for the promo online), going to a PCF pavilion, and talking to a rep on the phone. It does NOT say that if you simply transfer the money and don't do any of the above that you will get the bonus. In other words, it appears that you have to talk to someone at PCF personally.

Hi Loonie

Having to call them to sign up for offers was a hassle so some time ago I had sent them a suggestion to let users sign up for offers on line when we log in to our accounts. Now I imagine others likely sent them this same suggestion, and It looks like they listened..

When I signed into online banking and clicked the sign me up button the page with the T&C's was displayed, on it was a number to call that was boldly displayed. So I expected I would still have to call them

However, the next morning the email below arrived. So we tried the same process with another account with the same email the next day.

"Confirmation: Your new interest rate is now in effect.

Get ready to watch your savings grow. You're now earning 3.1% interest* until December 15, 2014 on new deposits into any of these accounts:

• Interest Plus™ Savings Account
• No Fee Bank Account
• Interest Plus™ RRSP
• Tax-Free Interest Plus™ account

Simply deposit new money into any of these accounts and
start earning more interest today. "

The Promos tab and News sidebar say new deposits to PC for the 3.1% rate have to be made by Dec 15. The way I read PC's offer is they have to be made by Sept 30.

The above is true and I'd like to point out that anything you put into PCF after today earns 1.3% (NOT 3.1%). The same goes for Tangerine. The customer service reps don't seem to know this as they've stated to me multiple times that since we've 'enrolled' in the offer, we earn interest on ALL new deposits before December 15. This is not true. Whatever we put in after today does not earn bonus interest.