Hubert GICs better than advertised? | GIC | Discussion forum
From Hubert's website:
Interest is calculated daily, paid and compounded annually for our term deposits.
What I'm seeing in actuality is daily calculation and daily compounding like what Ally does, not annual compounding like they say. This gives you an effective rate boost, from say 3.45% to around 3.50% or so. Not huge, but hey, I'll take the surprise to the upside. Thanks Hubert! Interest is paid annually so at least that statement is correct. Anyone else observe this?
December 12, 2009
I'm confused – interest on GICs at Hubert is compounded daily and paid annually at Hubert? I don't see how you could have that. It'd have to be paid monthly in order for it to compund every month. Sounds like it's only compounding and paid annually, which is what you said.
Yes, it appears to be compounded daily and paid annually. I think you're confused because you believe that interest has to be paid out in order for it to compound. It does not.
December 12, 2009
You say Hubert uses GIC rate/365 in a leap year gives you extra compounding. How come? Wouldn't GIC rate/366 be better? Always get confused with calculating daily compounded interest – and I work in banking!
Doug, a daily interest rate of x/365 is simply a bigger number than x/366 where x is the annual rate. If you compound daily, you are compounding extra interest every day compared to a rate of x/366.
How did I come up with this? Based on a recent annual interest payment I received on a GIC, I have "reverse engineered" the interest policy and it appears to be daily compound interest with x/365, with an extra day's interest payment added in. The interval the GIC covered included Feb. 29. There is the possibility that I am wrong though. However I'm very confident that the compounding is daily not annually.