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Email this8:27 pm
October 21, 2013
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I'm stumped.
A year ago, I bought a 15 month GIC, compounded annually, no fancy footnotes or conditions.
I checked to see that the interest for the first year had been credited. It had, but the amount credited is higher than I expected.
The rate on the GIC is 3.00%, but the amount I received works out to 3.0165%. It is almost equal to an extra two days' interest, pro-rated.
This is a flat rate, not a rate composed of two portions. There is no bonus. tiered rates, reimbursement, or anything of that kind. Te funds are non-registered. We are agreed on the amount of the principal.
Shouldn't it just be [principal x 3%]?
For obvious reasons, I am not motivated to identify the FI or waste time trying to reach them on the phone toi discuss this, but it is one that is discussed regularly on this forum, so I assume others have had a similar experience and someone must be able to explain this to me.
Can someone please clarify what has happened, or should I expect a correction when the monthly statement comes?
Thx
8:42 pm
April 6, 2013
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Would the first anniversary be on a non-business day, like a Saturday?
8:48 pm
February 16, 2013
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Did you take into account that this year was a leap year , giving you at least one extra day of interest?
11:02 pm
October 21, 2013
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The anniversary date was a regular weekday, last Friday. Would it have made any difference if it weren't?
I did think about the fact that it was a leap year but I felt that a year is a year is a year and couldn't see why they would give me more money for the extra day. I reasoned that the banks wouldn't likely expect to pay out an extra 1/365 every four years - although they have to for HISAs. My assumption was that the rate was calculated to reflect the entire year. Was I wrong?
6:51 am
September 15, 2017
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Loonie,
I assume you are referring to P.T. as I have had same experience with their 15 month GIC. After 1 year, they credited 367 days interest. One "extra" day is because of the leap year and one "extra" day is because they included the anniversary day for the calculation. For interest paid at the end of the 15 months, the calculation started with the day after the anniversary day. Compared to what I expected, they paid interest for 1 more day for the first year and 1 fewer day for the last 3 months (based on number of days in the 3 months). Overall, no excess interest was paid. Yes, some F.I. pay interest for an extra day in a leap year.
6:57 am
November 7, 2014
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I have found that, depending on the institution, extra interest is paid for a leap year. Don't know why there would be another day of interest. Sometimes there are glitches in their computer programmes, and they can claw it back at the end.
9:00 am
September 6, 2020
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I cashed ALL my RRSP GIC's in the 1990's and invested the cash elsewhere.
I started purchasing term deposits/GIC's in 2018.
I had no feel for where I should buy. A friend recommended buying several $1,000 GIC's with relatively short terms. I tried 120 day, 9 month, 18 month, 1 year and a few 2-5 year GIC's. I found new features that changed since the 1990's. It took about 6 months before I found a MB CU.
I was interested in an Excel spreadsheet program. I had no spreadsheet for GIC's in the 1990's. I created a flexible Excel spreadsheet for ALL terms 31+ days and 1+ year(s). I noticed when an anniversary date happened in April the FI paid one more day of interest for February 29th. I found that ALL the FI I deal with pay extra day interest for leap year.
On the CU statement the GIC is reported with principle plus paid interest and earned interest (i.e. accrued interest). The banks and CU report differently by 1 day. Put July 1st in my program and it computes CU GIC value to June 30th. For bank statements put June 30th (i.e. may be last business day of month) for GIC value.
You can purchase GIC's any FI, insurance company, mutual fund company. I found a FI that pays competitive 5 year rates, good service, good reporting. Ease of depositing/withdrawing funds is important.
Have a Great Day
1:59 pm
October 21, 2013
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Thanks for your comments and experiences. I guess I shall assume that leap year is the issue and that a year is not just a calendar year.
Who knew?
It sounds like yearly terms are in fact daily rates which are advertised as yearly ones for simplicity. This may account for the odd numbers often seen at, for example, Motive, e.g. 2.53 or whatever.
I've noted other minor discrepancies at other FIs in the past but never bothered to investigate as it seemed too much trouble, was in my favour, and smaller amounts than this.
Optimistically, we should therefore see a slight uptick in rates next year! Hah!
4:14 pm
February 17, 2013
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gicjunkie said
I have found that, depending on the institution, extra interest is paid for a leap year. Don't know why there would be another day of interest. Sometimes there are glitches in their computer programmes, and they can claw it back at the end.
I haven't dealt with an FI that actually paid and extra day of interest in a leap year. 1 year is 1 year whether it's 365 or 366 days. Exception is short terms that pay less than a year.
8:45 pm
April 6, 2013
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Loonie said
The anniversary date was a regular weekday, last Friday. Would it have made any difference if it weren't?
…
I was thinking that perhaps it was a Saturday and Saturday isn't a business day for the banks.
So, they compounded the interest on Monday and Monday would be an extra two days past the anniversary date.
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