Just offered 3% (!!!) at Tangerine for 180 days | Page 5 | Tangerine Bank | Discussion forum

Loonie said

I don't see how they could possibly go back through all the interest ever deposited and declare it not subject to additional interest This would be even more difficult when there have been withdrawals. Who's to say whether a withdrawal is from principal or interest?

In any event, it is beyond me to sort this out. I just want to know if anyone else has done the math and found it to be correct.

If nobody is able to verify their numbers, or nobody has tried successfully, then I have to ask myself if we're really getting what we thought we were getting, or did we miss something in the T&C? It's possible that they could make it so complicated that very few people could follow it. I just want to know that I have understood the offer correctly, and that they are giving us what they said they would.
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Loonie, I calculated the Additional Interest payment for the month of June, for the 2.10% offer on new deposits between January 1, 2015 and June 30.

My calculated payment, after rounding to the nearest cent, is exactly the bonus interest Tangerine credited to my account on July 1 for that offer. The Additional Interest rate was indeed 1.05% per annum.

I looked at all my new deposits from January 1 to June 30, ignoring any regular interest and bonus interest credits from Tangerine, to determine the eligible balance of each day. I calculated daily interest on those balances, using the factor 1.05%/365, for each day from June 1 to the day before the day the 3%-for-180-days offer superseded the 2.10% offer. I rounded at the end after totaling up all the interest (not each day's interest before totaling).

I actually received two bonus interest payments on July 1 for the month of June. One payment was for the part of June the account was under that offer. The second payment was for the remaining part of June that the account was under the 3%-for-180-days offer.

Loonie, you should not round off the daily interest to 2 decimals (and get 16.43). You should round off the daily closing balance to 2 decimals, but in your example there is no change in the daily balance during the month. So $10,000 x 1.95% / 365 * 31 will give you 16.5616 or $16.56.

As for your other comments about compounding, since August also has 31 days, you can expect bonus interest of either $16.56 again or $16.59 (since new balance $10,016.56 x 1.95% / 365 * 31 will give you 16.5891).

Loonie said
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Are you saying that the bonus interest received for June on July 1 would not be included in the base amount for calculating bonus interest in July? - in other words no compounding of either Posted or bonus interest. And are you also saying that the bonus interest from the previous offer (1.05) which ended when the new one took effect, would also not count? I would have thought that once the old offer was over, then what you have at that point is your new starting capital. If not, each subsequent offer will in reality be worth less than the last, and one would be better off to take the interest out and move it to a different account, which is tedious and seems silly to me.

I hope I've got this straight now!

The 3%-for-180 days offer is not based on "net new deposits". The offer is on the entire balance. July's 1.95% Additional Interest payment, that will be made on August 1, will count the June Additional Interest payments, that were made on July 1.

The wrinkle is that the 1.95% Additional Interest payment will be calculated using the same daily balances as the regular interest payment on the previous day. That has the effect of excluding the one regular interest payment on the previous day. This is term #7 of the offer:

7. Interest is calculated daily and paid monthly for both the Posted Rate interest payments and the Additional Interest payments. Additional Interest will not be paid and will not be payable until the start of the month following the month in which it was calculated, and the calculation for that month will not include interest on top of Posted Rate interest for the previous day (Example: If the month ends on July 31, 2015, the Bank's applicable Posted Rate of interest will be paid to that Applicable Account on July 31, 2015 and any Additional Interest will be paid to that Account on August 1, 2015. Both Additional Interest and Posted Rate interest payments will be calculated based on the same balance for the month of July, despite the fact that the Posted Rate interest is paid on July 31, 2015, one day before the Additional Interest is paid.). Any Applicable Account closed prior to the payment of Additional Interest will forfeit any Additional Interest calculated during the month in which the Applicable Account is closed.

Thank you for your patience and input.

I have checked, and the start date is listed as June 23, which is the same as what I was told on the phone.

I think I have followed all advice given, and still can't make it work out anywhere close.
I must be doing something very wrong.

This is what I have done (and this account did not get the 2.1 offer, so that is not a complicating factor):

Most recent (and only) transaction in June was a withdrawal June 2, so I have taken the balance as of June 2 after this withdrawal.

Balance x 1.95% divided by 365 days = bonus interest expected per day.

There is no number of days that I can multiply this by that comes close to the interest credited on July 1, whether or not I round anything off at any stage. If I use 6 or 7 days, the interest credited is significantly lower than expected. Only if I use 5 days can I bring it into the range of interest credited, but still too far from identical to be due to rounding.

Please tell me what I am doing wrong if you can.

Take the bonus interest expected per day & multiply by 8 (June 23 - 30). Why not call them and tell them that is what you should get.

Loonie said

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This is a different account than one I mentioned previously. One belongs to me and one to spouse. I thought it might be easier to make this work out with the one that did not receive the 2.1% deal, as there would be no chance of confusing which interest payment belonged to which promo, but I can't seem to make any of them work out.

Yes, the end date is Dec 19.
I took all the account info from the Tangerine print-out.

I recalculated using Norman1's formula above, and used a different calculator just in case there is something wrong with the calculator, and still got wrong result. The amount credited is under by something in the vicinity of 50%.

I guess I will have to phone them for clarification. I don't like making the phone calls, but I would like to understand what is going on.
I actually doubt they made a mistake, as that rarely happens with everything being electronic. But, still, it nags at me that I can't make sense of it, and I would like to be able to calculate with confidence in future.

The 1.95% Additional Interest payment is fairly simple. It looks like you have a rare Tangerine mistake!

Under by around 50%. Hmm. Could they have given you 0.95% Additional Interest instead of 1.95%?

I'm curious. What is the per annum rate of the actual bonus payment for the eight days? This is the formula:

Actual rate = [ (Actual bonus payment) / (June 2 closing balance) ] x 365 / 8

That's right: I was expecting my formula to return something like 0.0195 which is 1.95%.

You got 0.0125 which is 1.25%. That's not random like 1.2322423%. Yes, it does look like your accounts are set up for 1.25% Additional Interest instead of 1.95% Additional Interest!

I don't know what Tangerine's computer system is like for their telephone agents. I would think they would just pick a pre-configured offer from a list. However, it is possible they have to configure the parameters of the offer individually!

Another possibility is that you have been given a slightly different 3%-for-180-days offer? Mine is 1.05% regular interest + 1.95% Additional Interest. Could yours be 1.75% regular interest + 1.25% Additional Interest? Would you be able to calculate the regular interest paid on June 30 to see if it was 1.05% per annum?

You're welcome, Loonie. Interesting that we are in the same situation, owning cashable GICs at Oaken that pay 2.25% and mature in December. There are several things to consider:
1. The yield to maturity of the GIC is slightly less than 2.25%. Or put in another way, since my $10,000 GIC is worth $10,134 today, I really have $10,134 available at 3% rather than $10,000 earning 2.25%.
2. It is not clear to me from the terms and conditions that a drop in interest rates, and a subsequent drop in Tangerine's "Posted Rate", will affect the total return. In a previous promotion, when they lowered the Posted Rate, they raised the 'Additional Interest' (rate) to keep the total the same. Where do you see it different this time?

On the other hand, it is a positive for Oaken that they give advance notice of a rate change. That can help in the decision making for your Oaken investments.

2of3aintbad said

You're welcome, Loonie. Interesting that we are in the same situation, owning cashable GICs at Oaken that pay 2.25% and mature in December. There are several things to consider:
1. The yield to maturity of the GIC is slightly less than 2.25%. Or put in another way, since my $10,000 GIC is worth $10,134 today, I really have $10,134 available at 3% rather than $10,000 earning 2.25%.
2. It is not clear to me from the terms and conditions that a drop in interest rates, and a subsequent drop in Tangerine's "Posted Rate", will affect the total return. In a previous promotion, when they lowered the Posted Rate, they raised the 'Additional Interest' (rate) to keep the total the same. Where do you see it different this time?

On the other hand, it is a positive for Oaken that they give advance notice of a rate change. That can help in the decision making for your Oaken investments.

I'm afraid I don't follow your first point. The Oaken GIC is supposed to be cashable giving you the amount earned to date, as I understand it. Going forward, for the remaining (approx.) 6 months, if you moved it to Tang, you would, if all goes well, get 3% p.a. for that period. So I don't follow how the 2.25 is reduced. No doubt I'm missing something.

I did not follow whatever happened on previous occasion when the basic interest rate fell during a promo, so was not aware of that. You may be right that they intend to keep it at total of 3%, which would be great if true. I had interpreted this clause otherwise: "Any change to the Posted Rate will result in a corresponding change to the Offer. Additional Interest and/or Posted Rates may change at any time without prior notice." However, considering what you are saying about what happened in the past, I see that it is more ambiguous than I had realized. What is a "corresponding change"? Does it go in tandem with the Posted Rate, as I had assumed it might, or does it balance the decline in Posted Rate and thus keep the overall rate stable? And why can't they speak clearly?

In view of all that, I am annoyed with the "without prior notice" clause. I suppose we will notice, via this forum if nothing else, when Posted Rate goes down, and that will prompt us to check on what has happened to the Additional Interest rate. However, considering the ambiguity of the "corresponding change" clause, I feel uneasy, and it leaves me wondering if I ought to be checking in frequently in order to know what's going on with my money.

Loonie, what I was trying to say in my point 1.:
Dec 1, 2014 if you bought an Oaken cashable 2.25% GIC, you can expect to get $225 in interest on Dec 1, 2015.
Yesterday, the GIC could be redeemed with $134 plus a few cents interest. So the decision that day was: either you leave it with Oaken (and you will earn another $90, which really is 2.22% on $10,134), or you start earning 3.00% on the $10,134 at Tangerine (and you will earn approximately $122 by Dec 1, depending on how long the transfer takes).

So every day we keep our cashable GICs, they are worth more but returning a little less, especially compared to Tangerine.