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Coast Capital -- new offer
April 28, 2020
7:45 am
Doug
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Alexandra said
Hi again Doug, I would think that the GIC would be calculated at the 4% til you converted say April 30th. Instead of getting the interest paid in November or December 2020 when the 4% GIC would have matured, you would get the principle and interest paid out at the new date, i.e. 19 or 28 months after April 30th, 2020.

I don't know why there would be tax implications. One pays tax on the calculated interest every year whether or not you actually received it. As I mentioned at an earlier date, lately I have opted to get most of my GIC's interest paid out annually instead of waiting for the maturity date. Then I can use that interest to get the best rate at the time instead of laddering and waiting for the interest to be paid out physically on maturity dates. Am I missing some important factor?  

Jowett said
Hi Alexandra, actually it was me that replied to your previous post, not Doug.

My point about taxes would be that if the GIC was actually converted at the end of April rather than Nov/Dec you would then be paid interest after 12 months and again after 19 months from the end of April. This effectively results in 2 interest payments in 2021, instead of another payment in Nov/Dec of this year. This would mean that you would defer paying tax until 2021 tax year on the 7 or 8 months of interest between April and Dec of 2020. Depending on your tax circumstances that could be a good thing.  

Can't remember who I was replying to, but I think it was both. sf-cool

Anyway, if I've understood you correctly, Alexandra, yes, I think we're in agreement in terms of how this would be structured. If you convert to the special offer GIC rate, your new term would begin on the day you convert and pay you the new rate for 19 or 28 months, however long you opted for. You would be paid 4.0% until the day before you convert, absolutely.

Jowett makes a good point on CDIC coverage. Your conversion to a new GIC would be treated as a new term for the purposes of CDIC deposit insurance, and would be comingled within your applicable deposit insurance limit. It would no longer be covered under transitional deposit insurance provisions. This is fine, but just remember, if you are exceeding your deposit insurance limits with Coast, they are rated roughly the same as Equitable Bank and Home Trust [BBB(high) versus BBB and BBB(low)]. If you are fine exceeding your limits with EQ Bank and Oaken Financial, then you should be fine with exceeding your limits as Coast.

Cheers,
Doug

April 28, 2020
9:51 am
Alexandra
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Hi People;

Well on Monday I did the blended rate for most of my GIC's originally at the 4%.

However, on one of the GIC's, I left half in the original 4% one maturing in November. The other half and the rest of the GIC's I put in the new blended rate GIC's @ 3.16% for 28 months...i.e. 28 months starting at the end of April 2020.

This way, I don't have to worry about going over the CDIC limit of $100K as the over amount is still under the original guarantee of 100% of the investment.

April 28, 2020
10:00 am
Doug
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Alexandra said
Hi People;

Well on Monday I did the blended rate for most of my GIC's originally at the 4%.

However, on one of the GIC's, I left half in the original 4% one maturing in November. The other half and the rest of the GIC's I put in the new blended rate GIC's @ 3.16% for 28 months...i.e. 28 months starting at the end of April 2020.

This way, I don't have to worry about going over the CDIC limit of $100K as the over amount is still under the original guarantee of 100% of the investment.  

Sounds like a reasonable approach, Alexandra. Thanks also for the follow up to confirm much of what has been speculated in terms of logistical and related matters. sf-cool

Cheers,
Doug

April 28, 2020
4:21 pm
Bud
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Hello!! how do i get this blended rate can i do better than 2.35% 15mths new member? 100k only? cdic

April 28, 2020
4:38 pm
Doug
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Bud said
Hello!! how do i get this blended rate can i do better than 2.35% 15mths new member? 100k only? cdic  

Bud,

Do you have an existing 4.0% GIC and did you receive an e-mail or telephone notification from a Coast rep? Both are required to receive the offer. You might be able to ask about the offer if the condition to the former is "true," but not having an 4.0% GIC would certainly disentitle you to anything higher than 2.35%. sf-cool

Thanks,
Doug

April 28, 2020
10:36 pm
Rick
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tgaucher said
Could anybody show me the math of how they come up with this blended rate for either scenario  

Now that Alexadra has given us a rate we can work with....I'll give it a shot. Not sure of exact dates so I'll use mine...I started a 4% GIC in Feb as well. All numbers are rounded and my math is rusty...so feel free to check me on them.

Original term: 50K @ 4% matures Nov 2020 for a value of $55,700.00
Cash early in April 2020 - 50K @ 4% for 26 months = $54,435.00

Bonus Calculation for 1000 Alex!
$54435.00 @3.16% 213 days =$55439.00($1004.00 Interest)
$55,700.00 - $55,439 = $261. 00 lost interest to original date of maturity due to blending.

$54,435.00 @ 3.16% for 28 months = $58,235 which equals the original $50,000 investment @ 3.584% annually, compounded yearly, over the blended 4.33 year term .....ballpark.
After thought edit:
If you let the original 4% investment mature to $55,700, you would have to find a rate of 2.875% for 1.583 years to break even.
What will rates be in November?

April 29, 2020
5:52 am
Bud
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Why arent they just lettin u 4%rs mature an offering rollover to their current 2.35 rate for 15mth

April 29, 2020
12:17 pm
Rick
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Bud said
Why arent they just lettin u 4%rs mature an offering rollover to their current 2.35 rate for 15mth  

The term was for 33 months, and I believe they started offering it in February, so they don't start maturing until Novemberish. I'm sure if the 2.35 is available in November, they would love for you to re-invest with them. Since the promo seems to be funding their small business aid package, don't think the promo will be around in November. But...like I said, who knows what the rates will be then?

April 30, 2020
8:55 am
tgaucher
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I did the math and basically what it comes down to is 2.05% for 11 additional months and you get 1 additional month at 4%. Don’t be fooled by their term “blended rate”

April 30, 2020
9:20 am
Vatox
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tgaucher said
I did the math and basically what it comes down to is 2.05% for 11 additional months and you get 1 additional month at 4%. Don’t be fooled by their term “blended rate”  

Are you saying that the quoted rate is not what they are paying? Both are over 3%.

April 30, 2020
9:30 am
tgaucher
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We are already getting the 4%, no matter what as that is our agreement until nov 2020. All they are offering is 2.05 plus the one additional month of 4% on the additional term. Don’t be fooled by the way they are using the 3% blended term

April 30, 2020
9:49 am
Vatox
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tgaucher said
We are already getting the 4%, no matter what as that is our agreement until nov 2020. All they are offering is 2.05 plus the one additional month of 4% on the additional term. Don’t be fooled by the way they are using the 3% blended term  

Without seeing the worded document, it’s hard to say how they are representing the figures. Is the one extra month of 4% just added money or is it subtracted from the 19 months. And is there bonus interest calculated each month on top of the 2.05%. It would be a serious offence to quote me at 3% for 19 months and only pay out 2.05%.

I’d like to see the actual printed offer. And then I would talk to a rep about the actual calculated interest and how they get that blended value.

April 30, 2020
9:58 am
tgaucher
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The printed offer is above,I posted it a few days ago. The way the rep explained to me is that the 4% is calculated for the remainder of the term which is approx 7 months plus 1 more month at 4%. That leaves a balance of 11 months at the 2.05%. Using these rates over the 19 months, 8 months at 4%,and 11 months at 2.05% is how they come up with the blended rate. Just remember you are guaranteed the 4% until November if you do nothing anyways.

April 30, 2020
9:59 am
Vatox
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I’m sure there is bonus interest added to the base standard of 2.05%.

April 30, 2020
10:06 am
Vatox
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Okay, then take the interest for the 8 months and add it to 11 months of 2.05 and one extra month of 4%. Or is that 9 months 4% and 10 months 2.05%. I’m sure the total interest is 3% for the 19 months

April 30, 2020
10:10 am
tgaucher
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Call your rep. No mention of bonus interest anywhere. I am just saying what my rep told me. I can’t get the calculations to work out. My math shows an average of 2.87% over 19 months, using 4% for 8 months and 2.05 for 11 months. Let me know if I am doing something wrong

April 30, 2020
10:17 am
Vatox
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thats why I said earlier, that I would want a 3 or 5 year extension to accept the 3%. I’m not going to give up the 4% of 8 months to gain 19 months of 3%. I want longer. It’s a fear tactic. As you mention the extension aside from the existing 4% is crappy. But you need to look at the blended rate and not just look at what you have guaranteed now with 8 more months at 4%. Because that 2.05% may not be available in 9 months when your GIC matures.

April 30, 2020
10:24 am
tgaucher
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That’s exactly what is comes down to. Are you going to get better than 2.05% in November when the original term comes due. Motive has a 2.20% high interest savings account but no guarantees it will be around in November. I am personally going to wait until November.

April 30, 2020
10:30 am
Vatox
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tgaucher said
That’s exactly what is comes down to. Are you going to get better than 2.05% in November when the original term comes due. Motive has a 2.20% high interest savings account but no guarantees it will be around in November. I am personally going to wait until November.  

Me too

April 30, 2020
11:35 am
Alexandra
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Vatox said

Me too  

Take a look at Ricks calculation on 28 April. His is pretty much in the ballpark

I agree about Coast Capital not being too customer orientated. But you couldn't pass up that 4% per year for 33 months.

As I said, I left in a fair amount at the full 4% maturing in 33 months. The rest of the GIC's representing approx 60% of the original investment I put into the blended rate GIC's.

I think that if most people do end up leaving their investment at 4% until maturity this coming Nov and Dec; Coast Capital will probably offer something pretty good or everyone will cash in and run.

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