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Interest Calculations Incorrect
June 7, 2022
1:09 pm
Hopeful
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June 7, 2022
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I noticed that Oaken Financial does not calculate interest in the same way as other financial institutions do. Specifically:
1) when I made a deposit on Dec 8, I expected to receive interest on that deposit for 24 days (Dec 8 to 31 inclusive);
2) when the interest rate changed effective Feb 03, 2022 (as per official announcement), I expected to receive the higher rate applied for 26days (Feb 3 to 28 inclusive); and
3) when the interest rate changed effective Apr 14, 2022 (as per official announcement), I expected to receive the higher rate applied for 17 days (Apr 14 to 30 inclusive).
In each instance noted above, I received the applicable interest for one day less than expected. During the nearly six months of calling and calling and calling, I was given various reasons such as:
a) your deposit was not received until later in the day so you don't get interest on that day; and
b) you don't receive the increased interest rate until the day after the "effective" date of the interest rate increase.
After speaking many times with many customer service agents I was finally told it is company policy to pay interest "up to, but not for, the last day of the month" and then post that amount to my account on the last day of the month. The interest payable for the last day of the month is then included in the calculation for the next month's interest payment - thus reasoning that "the customer is not shorted on interest but one day's interest is merely delayed to the following month and ultimately, when the customer withdraws funds from the account, everything will balance out".
I see the (intended) effect of Oaken's "policy" to cleverly defer one day's interest, compounded monthly, in perpetuity.
Has anyone else experienced this with Oaken or other institutions?

June 7, 2022
5:44 pm
hwyc
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Yes. The topic come up in the past. Just search 'last day of month' in the Search HighInterestSavings.ca above.

June 7, 2022
5:44 pm
Norman1
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Yes, Simplii Financial does the same thing.

EQ Bank does something similar. Interest is calculated for first day to last day of month. Interest is credited on the first day of the next month.

June 7, 2022
7:08 pm
Dean
Valhalla Mountains, British Columbia
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.
And sometimes Tangerine does it Both ways . . .

    - Regular interest (now at 0.10% LOL) is paid on the Last day of the month.
    - And if it applies, any 'special-offer' interest is paid the Next day.

Go figure sf-smile

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

June 8, 2022
5:23 am
Norman1
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It is not material whether the monthly interest is paid

  1. on the last day of the month, after the balance for the last day is closed, or
  2. at the open of first day of the next month.

#1 was just a common hack to get the interest paid to show on that monthly statement.

I suspect someone realized that the hack could be eliminated if one paid interest instead on the last day of the month for the daily closing balances from the last day of previous month to the second to last day of the current month.

June 8, 2022
5:47 am
RetirEd
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That last day's interest does not compound until the following month-end. That's shorting the client. No wiggle room.
RetirEd

RetirEd

June 8, 2022
5:54 am
savemoresaveoften
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I cant say if the FI does that for financial or its a operation/system limitation reason. Either way its not material to worry about it in my mind. Not like they are short changing me on 1 day of interest.

June 8, 2022
9:19 am
blake
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I run an excel program for all of my GICs and Oaken is always bang on as are most others. If any discrepancies it will be a bit more at PT.

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