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eSavings rate decreased to 1.00%
May 12, 2021
4:59 am
hwyc
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As per Alterna Bank rate page - HISA 1.00%

August 1, 2021
9:48 am
Rebelyouth
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Hi Everyone,

First time on the forum and posting.

My question is : how do they calculate the 1% interest?

I did calculate my amount and I see the percentual is 0.848 % ( so if I round up ) = 0.85%.

They base the money divide 12 months or 360/365 days and apply that percentual?

Where I can find information to check about their calculation?

Thank you.

August 1, 2021
10:40 am
topgun
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Interest is calculated daily. The sum of each daily amount is added monthly for many savings accounts. Principle * .01% / 365 daily.

Have a Great Day

August 1, 2021
10:51 am
Norman1
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Alterna Bank seems to use the usual method. Each calendar day of the month, one earns interest of 1/365 of 1% of the closing balance of the day.

I checked mine for June. Worked out to be 1.0001% per annum.

August 1, 2021
11:18 am
HermanH
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Rebelyouth said
My question is : how do they calculate the 1% interest?

I did calculate my amount and I see the percentual is 0.848 % ( so if I round up ) = 0.85%.

They base the money divide 12 months or 360/365 days and apply that percentual?

That is a pretty big difference. I found that there can be differences depending on the payment for interest, too. For example, I have a 1-year cashable GIC with HSBC and I had the choice of getting interest paid either at the end of each month or a lump sum at maturity. I found that getting interest paid monthly is less than if I had elected to receive the entire sum of interest at maturity.

August 1, 2021
12:05 pm
Rebelyouth
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Thank you for your answers.

So, if I put $30,000 on Jan 1st at 1.00% (let's say was always that, and didn't decrease to 1.00 %), 12 months, 365 days, and it will be, at Dec 31st, $300.

If I put another $3,000, on June 1st the amount will be $33,000, the interest will be calculated as $30,000 at 1% from Jan 1st to Dec 31st and the additional $3,000 at 1% from June 1st to Dec 31st and added to the amount?

Another question: the amount is calculated the same day you deposit the money to the account and not after the holds period ( 5 days), right?

August 1, 2021
12:21 pm
Norman1
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Rebelyouth said

So, if I put $30,000 on Jan 1st at 1.00% (let's say was always that, and didn't decrease to 1.00 %), 12 months, 365 days, and it will be, at Dec 31st, $300.

It is not as simple as that because Alterna Bank pays interest on its saving account monthly.

It will be $30,000 from January 1 to January 31. There will be $30,000 x 31 / 365 x 1% = $25.48 interest added on February 1.

It will then be $30,025.48 for the month of February and more interest will be added March 1.

Yes, interest is paid from effective date of deposit. Use the dates shown in the monthly statements. Some places, like Simplii, show the posting date on their online banking site and not the effective date of the transactions.

August 1, 2021
12:23 pm
HermanH
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Rebelyouth said
So, if I put $30,000 on Jan 1st at 1.00% (let's say was always that, and didn't decrease to 1.00 %), 12 months, 365 days, and it will be, at Dec 31st, $300.

If I put another $3,000, on June 1st the amount will be $33,000, the interest will be calculated as $30,000 at 1% from Jan 1st to Dec 31st and the additional $3,000 at 1% from June 1st to Dec 31st and added to the amount?

Another question: the amount is calculated the same day you deposit the money to the account and not after the holds period ( 5 days), right?  

I think that your suggested calculations are correct, if the bank specifically says that it calculates interest daily and pays it monthly.

Most institutions give you the benefit of the doubt and begin to calculate interest on the date of deposit and not after the hold period expires. I cannot say for every bank, but all with whom I deal act in this manner.

August 1, 2021
2:41 pm
topgun
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Interest is calculated on the end of day balance.

Have a Great Day

August 1, 2021
4:58 pm
dougjp
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To me its a clear signal they have exited the deposit market, perhaps hoping to retain a few bucks from those not paying attention.

Its too bad because they used to be competitive, but times always change I guess. I used to have a lot of TFSA funds with them a few years ago.

There are 3 kinds of people: those who can count & those who can't.

August 1, 2021
5:26 pm
Rebelyouth
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Thank you guys for your explanation.

Using the similar formula : $amount x 31 / 365 x 1% = $ interest , provide from Norman1, I can see the calculation now its working fine.

Dougjp : I think so too, right now I check EQ bank and their interest rate are pretty good...maybe its time to move.

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