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[Simplii Financial] 3% promo on new deposits for 4 months from Simplii (No QC)

  • Last Updated:
  • Dec 7th, 2017 12:30 pm
Member
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Jun 23, 2017
256 posts
64 upvotes
Toronto, ON
frankc92 wrote:
Dec 1st, 2017 11:22 am
Does anyone happen to know if they deposit bonus interest separately from the baseline rate? Based on my interest today, it looks like I only got ~1%.
I see two transactions on my HISA dated November 30th. One "INTEREST" and another on "INTEREST PROMOTIONAL INTEREST".
Member
Jun 12, 2010
347 posts
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YVR
905P4N6 wrote:
Dec 2nd, 2017 1:09 pm
I see two transactions on my HISA dated November 30th. One "INTEREST" and another on "INTEREST PROMOTIONAL INTEREST".
Really? based on what i've read around, it appears that the bonus interest is going to be paid out in April?
Deal Guru
Jan 7, 2002
10789 posts
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Waterloo, ON
frankc92 wrote:
Dec 2nd, 2017 2:53 pm
Really? based on what i've read around, it appears that the bonus interest is going to be paid out in April?
The bonus payment ("INTEREST PROMOTIONAL INTEREST") gets paid a week or two after the end of a promotion period. The current 3% promotion ends at the end of Feb so I'd expect to see the bonus for NOV/DEC/JAN/FEB some time in Mar18.
veni, vidi, Visa
Deal Addict
Feb 1, 2006
1239 posts
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choclover wrote:
Dec 2nd, 2017 12:42 am
Ironically, they shorted me a small amount of interest for November 2017. I called them and they acknowledged the error but couldn't explain what happened. They promised to credit me the difference but I haven't seen it yet (perhaps it takes a day or two to post).
Interesting. I wonder if you just got a clueless rep or whether it is actually true that interest for the last day of the month is paid on the last day of the next month.
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Mar 1, 2010
718 posts
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How much interest I should receive for 1% interest rate for $10000 everyday?
Deal Guru
Jan 7, 2002
10789 posts
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Waterloo, ON
gaogao wrote:
Dec 4th, 2017 6:42 am
How much interest I should receive for 1% interest rate for $10000 everyday?
0.01 * $10,000 * 1/365 ~= $0.27
veni, vidi, Visa
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User avatar
Jun 23, 2017
256 posts
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Toronto, ON
frankc92 wrote:
Dec 2nd, 2017 2:53 pm
Really? based on what i've read around, it appears that the bonus interest is going to be paid out in April?
Sorry, you're right ... the INTEREST was on Nov.30, 2017 .. the INTEREST PROMOTIONAL INTEREST was back on Nov.9 which would be the Promo interest for the period ending Oct.31.
Newbie
Nov 24, 2017
31 posts
11 upvotes
I don't know if this has been mentioned before and you'll have to forgive me for not reading the close to 600 posts...

but you will ONLY get 3% if you deposited ALL your money on November 1st and do not touch it for the whole 4 months.

The 1% of the 3% promotion is calculated on your daily balance. But the extra 2% is calculated on your AVERAGE daily closing balance for the whole period. IOW, each month that goes by from that 4-month period you lose 0.5% of that 2%. Every day that goes by you lose a little bit of that 3% on all new deposits done during the 4 months.

To give you some examples; say you deposit $100,000 on January 1st and your previous balance was zero. You will not get 3% on that $100,000 for 2 months. You will in fact get a total of 2%. 1% basic interest + 2% on an AVERAGE daily balance of $50,000 for the 4 months. Your AVERAGE daily balance for half the 4 months was zero. So in the end your average daily balance is just $50,000. So 2% on $50,000 is equivalent to 1% on $100,000. So in real life you will earn 2% on your $100,000.

Example number 2: Say you deposited $100,000 on November 1st and withdrew the $100,000 on December 1st. You will not get 3% on your $100,000 for a one month period. You will get the equivalent of 1.5% on your $100,000. That's 1% on your $100,000 for one month + one month at $100,000 and 3 months at zero give you an average daily balance of $25,000. So you get 2% on your average daily balance of $25,000 or 0.5% on your $100,000.

Btw, I'm discarding the fact that the 1% is compounded while the 2% is not when providing % as the impact is very small.
Jr. Member
Oct 24, 2007
161 posts
45 upvotes
Vancouver
I'm not quite sure if your calculations are correct.
For your Example 2: I will just calculate how much "Promotional Interest" is earned.

Method 1) 1 month x 2% x $100,000 = 2% x $100,000 / 12 months = $166.67 promotional interest total

Method 2) Average Balance Method (using months instead of days for simplicity): $100,000 for 1 month out of 4 = $25,000 average monthly balance.
Promotional Interest = $25,000 x 2% / 12 months = $41.67 per month. Now you have to multiply this by 4 months since this is the promotional period: = $41.67 per month x 4 months = $166..67 promotional interest total.

As you can see, you do end up earning extra 2% for the 1 month that you had your extra money in the account.
NumberThree wrote:
Dec 5th, 2017 2:59 pm
I don't know if this has been mentioned before and you'll have to forgive me for not reading the close to 600 posts...

but you will ONLY get 3% if you deposited ALL your money on November 1st and do not touch it for the whole 4 months.

The 1% of the 3% promotion is calculated on your daily balance. But the extra 2% is calculated on your AVERAGE daily closing balance for the whole period. IOW, each month that goes by from that 4-month period you lose 0.5% of that 2%. Every day that goes by you lose a little bit of that 3% on all new deposits done during the 4 months.

To give you some examples; say you deposit $100,000 on January 1st and your previous balance was zero. You will not get 3% on that $100,000 for 2 months. You will in fact get a total of 2%. 1% basic interest + 2% on an AVERAGE daily balance of $50,000 for the 4 months. Your AVERAGE daily balance for half the 4 months was zero. So in the end your average daily balance is just $50,000. So 2% on $50,000 is equivalent to 1% on $100,000. So in real life you will earn 2% on your $100,000.

Example number 2: Say you deposited $100,000 on November 1st and withdrew the $100,000 on December 1st. You will not get 3% on your $100,000 for a one month period. You will get the equivalent of 1.5% on your $100,000. That's 1% on your $100,000 for one month + one month at $100,000 and 3 months at zero give you an average daily balance of $25,000. So you get 2% on your average daily balance of $25,000 or 0.5% on your $100,000.

Btw, I'm discarding the fact that the 1% is compounded while the 2% is not when providing % as the impact is very small.
Newbie
Nov 24, 2017
31 posts
11 upvotes
g-money wrote:
Dec 5th, 2017 4:06 pm
I'm not quite sure if your calculations are correct.
For your Example 2: I will just calculate how much "Promotional Interest" is earned.

Method 1) 1 month x 2% x $100,000 = 2% x $100,000 / 12 months = $166.67 promotional interest total

Method 2) Average Balance Method (using months instead of days for simplicity): $100,000 for 1 month out of 4 = $25,000 average monthly balance.
Promotional Interest = $25,000 x 2% / 12 months = $41.67 per month. Now you have to multiply this by 4 months since this is the promotional period: = $41.67 per month x 4 months = $166..67 promotional interest total.

As you can see, you do end up earning extra 2% for the 1 month that you had your extra money in the account.
WOW! About your calculation in method 2. A bank that pays interest on a zero balance!!! Wow!!! ;) Sign me up!!!

Like I said, the ONLY time you will receive 3% is on the money that was deposited on November 1st and was not withdraw. Anything else deposited after will get less than 3%. I leave it as an assignment to the math students ;)
Jr. Member
Oct 24, 2007
161 posts
45 upvotes
Vancouver
It's not a zero balance. It's your Average Daily Balance (in my case Monthly). Average monthly balance for Nov-Feb is $25,000 Per Month and you get paid promotional interest for your Average Balance each month. That's why interest is calculated at the end of the promotional period. Yes you should sign up because you do get paid for zero balances in your eyes!!!!
NumberThree wrote:
Dec 5th, 2017 4:30 pm
WOW! About your calculation in method 2. A bank that pays interest on a zero balance!!! Wow!!! ;) Sign me up!!!

Like I said, the ONLY time you will receive 3% is on the money that was deposited on November 1st and was not withdraw. Anything else deposited after will get less than 3%. I leave it as an assignment to the math students ;)
Last edited by g-money on Dec 5th, 2017 5:36 pm, edited 2 times in total.
Newbie
Nov 24, 2017
31 posts
11 upvotes
g-money wrote:
Dec 5th, 2017 5:36 pm
It's not a zero balance. It's your Average Daily Balance (in my case Monthly). Average monthly balance for Nov-Feb is $25,000 Per Month and you get paid promotional interest for your Average Balance. That's why interest is calculated at the end of the promotional period. Yes you should sign up!!!!
Ok, let me try that again. You invest $100,000 on November 1st and withdraw all the money on December 1st leaving a zero balance for the next 3 months (for sake of simplicity we will assume all 4 months have same number of days). You expect to earn 3% on your $100,000 for a one month period. That would be $250.

But that's not the way Simplii will calculate it. First, you will get 1% for $100,000 for one month, that's $83.33. Second, the 2% bonus is calculated on your AVERAGE daily closing for the 4 months. Since you had one month at $100,000 and 3 months at zero, your AVERAGE daily closing is $25,000. So 2% of $25,000 is $500, but remember you only had money at Simplii for one month, so $500/12 = $41.66. So you will earn $83.33 +$41.66 = $125 (rounded). IOW, like I said in my earlier post, you have earned 1.5% on your $100,000 for one month.

The details is in the fine print. While the 1% is calculated on daily closing balance, the 2% bonus is calculated on the AVERAGE daily closing balance OVER the 4 months. This is not the same thing at all.

The reason Simplii is only paying the bonus interest at the end is that it is only after the 4 months are over that Simplii will know what is your AVERAGE daily closing balance!!!!!!!
Last edited by NumberThree on Dec 5th, 2017 6:03 pm, edited 2 times in total.
Jr. Member
Oct 24, 2007
161 posts
45 upvotes
Vancouver
Using average balance is mathematically identical to using daily balance accrual.

For example, the interest for a three-day period with daily closing balances b1, b2, and b3:

(b1 * 2%/365) + (b2 * 2%/365) + (b3 * 2%/365)
= (b1 + b2 + b3) * 2%/365
= (b1 + b2 + b3) * 1 * 2%/365
= (b1 + b2 + b3) * 3/3 * 2%/365
= (b1 + b2 + b3) / 3 * 3 * 2%/365
= (average of b1, b2, and b3) * 3 * 2%/365
= (average of b1, b2, and b3) * 2%/365 * 3

Both
1.(average of daily closing balances over offer period) above Oct. 31 closing balance and
2.portion of daily closing balance above Oct. 31 closing balance, if any,

methods will give the same promotional interest when none of the daily closing balances fall below the Oct. 31 balance.


I found the above in another blog to confirm my thoughts. The bonus is calculated OVER the 4 months so you get Paid the Interest OVER the 4 months.
NumberThree wrote:
Dec 5th, 2017 6:03 pm
Ok, let me try that again. You invest $100,000 on November 1st and withdraw all the money on December 1st leaving a zero balance for the next 3 months (for sake of simplicity we will assume all 4 months have same number of days). You expect to earn 3% on your $100,000 for a one month period. That would be $250.

But that's not the way Simplii will calculate it. First, you will get 1% for $100,000 for one month, that's $83.33. Second, the 2% bonus is calculated on your AVERAGE daily closing for the 4 months. Since you had one month at $100,000 and 3 months at zero, your AVERAGE daily closing is $25,000. So 2% of $25,000 is $500, but remember you only had money at Simplii for one month, so $500/12 = $41.66. So you will earn $83.33 +$41.66 = $125 (rounded). IOW, like I said in my earlier post, you have earned 1.5% on your $100,000 for one month.

The details is in the fine print. While the 1% is calculated on daily closing balance, the 2% bonus is calculated on the AVERAGE daily closing balance OVER the 4 months. This is not the same thing at all.

The reason Simplii is only paying the bonus interest at the end is that it is only after the 4 months are over that Simplii will know what is your AVERAGE daily closing balance!!!!!!!

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