Norman1 said
When interest is earned and when the interest is paid are different things.

Page 12 of the Day-to-Day Banking Companion Booklet says interest is earned daily and interest for a month is paid on the 7th business day after the end of that month:

Interest Calculation and Payment
Interest on your HISA balance is calculated daily using closing day balances of the HISA and the Regular Interest Rate determined by the Balance Level into which your Total Relationship Balance falls. Interest accrued on your HISA is paid on the 7th business day after the end of that month. …

It doesn't look like the interest for a month is paid the day after that month and just posted late.  

Based on the calculation and payment quote which Norman1 shows, the bank uses the closing balance of the HISA on a daily basis. And therein lies the problem - the closing balance for the first 8 days does not include the earned June interest, thus it is not itself earning compound interest during that time. The bank thus does not pay compound interest for 8 days. If this is happening over many thousands of HISA and other accounts, then the bank is saving a tidy sum (millions?) for itself every month.

Newton said
From post #8, "The Promotional Rate is an annualized rate and interest is calculated daily during the Promotional Rate Period only and paid monthly."

Interest earned on June 1st won't be paid until July 9th which was 39 days away. Can the bank still claim that interest is paid monthly?  

Yes, it's paid once a month.

Added: This is not an unusual practice for ISAs in brokerage accounts. Date of posted re-invested interest, or dollar amounts if not re-invested, can vary from the period covered by the payment. IOW, posted date is not relevant for the interest calculation itself.

Interest earned on June 1st won't be paid until July 9th which was 39 days away. Can the bank still claim that interest is paid monthly?

Page 12 of the Day-to-Day Banking Companion Booklet says interest is earned daily and interest for a month is paid on the 7th business day after the end of that month:

Interest Calculation and Payment
Interest on your HISA balance is calculated daily using closing day balances of the HISA and the Regular Interest Rate determined by the Balance Level into which your Total Relationship Balance falls. Interest accrued on your HISA is paid on the 7th business day after the end of that month. …

It doesn't look like the interest for a month is paid the day after that month and just posted late.

Is the interest on the June interest going to be calculated from the posting date of July 9, or the start of the month, July 1? Technically the interest is earned as of July 1, so it should be compounded from that date. But, it is not posted until July 9, so it might only be compounded from that date.

Which is it? I think I will only find out on the 7th business day of August.

The Promotional Rate is an annualized rate and interest is calculated daily during the Promotional Rate Period only and paid monthly. During the Promotional Rate Period, the total annual interest rate applicable on your eligible HISA will be the sum of the Promotional Rate and the Regular Interest Rate (as determined by your Balance Tier) calculated daily and paid monthly in two separate interest payments: (i) interest calculated at the Promotional Rate and (ii) interest calculated at the Regular Interest Rate. You will be able to see your interest payments posted to your HISA on your Online Banking or your Mobile App on the day after 7th business day after the end of each month.

There, I did the homework for you....... thank you... you are welcome.

amidat said
Booked/Value date is important.
If the interest was booked/posted on July 9 but valued for July 1, then I would expect that for July they would calculate interest on the earned June interest starting July 1.
However, it appears that interest was booked/posted and valued for July 9.
So, I would expect that for July they would calculate interest on the earned June interest starting July 9.
FYI. It appears that the daily closing balance from July 1 to 8 does not include the interest paid on July 9.  

You are correct that the posted daily closing balance did not include the earned June interest until July 9. But I will be very disappointed if that interest does not itself earn interest from July 1. I will compare the July interest which I will get in August to what I think it should be, and if it is less, then I will be writing to the CEO of ScotiaBank, the banking ombudsperson, and the Minister of Finance.

What happens say if a bank simply decides not to post interest until the end of the next month? Should they then be able to not pay interest on interest for an entire month? I sure hope not. It is not a lot of money, but there is the principal involved!

JohnnyCash said

The reason for the delayed payment of interest is because they have to calculate your relationship balances from all your accounts to determine the interest payable. Some of those balances are not available until a few days into the following month.  

I'm sure their computer could figure that out as of 12:01am on July 1, if they really wanted to.

I still want to know if they will calculate interest on the earned June interest as of July 1 or July 9.

rhvic said
I opened a HISA at Scotiabank in June, on a 5% promo to August. I was very surprised that earned interest for June was not posted until the 7th business day of July - July 9th. My concern is whether the earned interest is itself earning interest from July 1, or only from July 9. I can't get an answer yet from Scotiabank on this. Does anyone have experience with them?

Why do the big banks post earned interest so late the next month? The credit unions and other FIs I deal with post on the first day of the next month. Do the big banks not use modern computers or are they still using an abacus?  

The reason for the delayed payment of interest is because they have to calculate your relationship balances from all your accounts to determine the interest payable. Some of those balances are not available until a few days into the following month.

Why do the big banks post earned interest so late the next month? The credit unions and other FIs I deal with post on the first day of the next month. Do the big banks not use modern computers or are they still using an abacus?