When's Int Paid on Saving Account ?

[nfuz]

Is it usually paid on the last day of the month? (30/31)?

Or the last BUSINESS day of the month? (29th, if the 30th/31st are Sat/Sun?)

If Its on the last BUS day, then what happens to the 2 days of interest (30/31), next month is like a 33 day month assuming it doesnt end in sat/sun?

Please clarify.

Thanks

[Lyrrad0]

Is it usually paid on the last day of the month? (30/31)?

Or the last BUSINESS day of the month? (29th, if the 30th/31st are Sat/Sun?)

If Its on the last BUS day, then what happens to the 2 days of interest (30/31), next month is like a 33 day month assuming it doesnt end in sat/sun?

Please clarify.

Thanks

It depends on the bank. I have accounts that do it both ways. Some banks even pay it in the middle of the month based on the day of the money you open the account.

[gman]

Depends on the bank and depends on the account, I had a saving account that pays interest every half year.

[nfuz]

Just called em.... yeah its the last bus day of the month, the leftover 2 days will be counted next month :o

[angel_wing0]

depends on the bank. I know for pcf and icici they pay it on the last business day. I still havent received august interest yet for hsbc. Probably getting it tmr.

[angel_wing0]

hmm, hsbc still havent paid out my aug interest...cuz of labour day?!

[djino]

With HSBC, there is no set date for everyone. It depends on when your account was created/billing cycle.

Now as for interest payment. My billing cycle is on the 9th of the month. But I will not see it until the 2nd Business day after the 9th. If the 9th falls on a Friday. I will see it the following Tuesday (dated for the 9th of course).

So in your case, if you normally have it posted as the 29th of the month: August 29th was a Friday. and Monday (today) is a holiday. You most likely wont see it until Wednesday Sept 3rd, but it will be dated for the Aug 29th.

djino
"hope that makes sence"

[angel_wing0]

With HSBC, there is no set date for everyone. It depends on when your account was created/billing cycle.

Now as for interest payment. My billing cycle is on the 9th of the month. But I will not see it until the 2nd Business day after the 9th. If the 9th falls on a Friday. I will see it the following Tuesday (dated for the 9th of course).

So in your case, if you normally have it posted as the 29th of the month: August 29th was a Friday. and Monday (today) is a holiday. You most likely wont see it until Wednesday Sept 3rd, but it will be dated for the Aug 29th.

djino
"hope that makes sence"

thanks, but how is the billing cycle determined?

My first day for the account is August 12th (account activated, other bank chq deposit received)...so i guess i can assume that i will get interest on the 12th of every month?

[djino]

thanks, but how is the billing cycle determined?

My first day for the account is August 12th (account activated, other bank chq deposit received)...so i guess i can assume that i will get interest on the 12th of every month?

Possibly. Since you just created the account less than a month ago. You will just have to wait and see the date beside the interest paid to the account and use that for future reference. Just know that if it shows Sept 11th beside your beside your first interest paid does not mean you are receiving it right on the 11th of the month. It will always be the 2nd business day after the 11th but will always be posted as on the 11th day.

djino
"understood? :)"

[angel_wing0]

Possibly. Since you just created the account less than a month ago. You will just have to wait and see the date beside the interest paid to the account and use that for future reference. Just know that if it shows Sept 11th beside your beside your first interest paid does not mean you are receiving it right on the 11th of the month. It will always be the 2nd business day after the 11th but will always be posted as on the 11th day.

djino
"understood? :)"

Gotcha. That's pretty lousy imo, u lose one day of compounding basically every month. Imagine if it span 40 years...

[nfuz]

Gotcha. That's pretty lousy imo, u lose one day of compounding basically every month. Imagine if it span 40 years...

That 1 day would simply be used as the first day of next month, you don't lose it...

[angel_wing0]

That 1 day would simply be used as the first day of next month, you don't lose it...

You dont get my pt I think, the thing is the amount being compounded will be less since the money used for that day (the day or days before you int payment) will be the amount BEFORE the interest rather than AFTER the interest...if you know what i mean. I know it wont make a HUGE HUGE difference, but let's say after 40 years? Actually there might be an immediate difference if the interest is like alot.

[nfuz]

You dont get my pt I think, the thing is the amount being compounded will be less since the money used for that day (the day or days before you int payment) will be the amount BEFORE the interest rather than AFTER the interest...if you know what i mean. I know it wont make a HUGE HUGE difference, but let's say after 40 years? Actually there might be an immediate difference if the interest is like alot.

in savings account, interest is calculated on your daily closing balance...

ie:

If you have $100,000 in a bank, and the rate you're getting is 3.65%
Then on day 1, you've earned $10 (100000 * 0.0365 / 365), but not paid,
Day 2, you've earned $10, but not paid,
Day 3, you've earned another $10, but not paid.
...
Day 30, you've earned $10, $300 paid, bringing you to 100,300
Day 1 of next month = 100,300 * 0.0365/ 365 = 10.03

etc...

It doesn't really matter when its compounded as long as its compounded once a month, since it won't affect your balance at all, even over a long period of time.

[angel_wing0]

Day 30, you've earned $10, $300 paid, bringing you to 100,300
Day 1 of next month = 100,300 * 0.0365/ 365 = 10.03


Good example. The problem with this hsbc thing is, according to your example, on day 30 u earned $300, but since it wont be paid till the second business day of next month, you have to go thru 1-3 (sat and sun) days of having the 100000 instead of the 100300 to calculate interest. Yes it might be only 3-10 cents, but having this happening in say 40 years which is 480 months? it's going to be alot. Or did i miss something? :eek:

[gman]

Good example. The problem with this hsbc thing is, according to your example, on day 30 u earned $300, but since it wont be paid till the second business day of next month, you have to go thru 1-3 (sat and sun) days of having the 100000 instead of the 100300 to calculate interest. Yes it might be only 3-10 cents, but having this happening in say 40 years which is 480 months? it's going to be alot. Or did i miss something? :eek:

It should pay everyday. Your account is not updated on the holiday does not mean the holiday is not counted for interest.

[angel_wing0]

It should pay everyday. Your account is not updated on the holiday does not mean the holiday is not counted for interest.

I think everyone is missing my point. Let me try again with nfuz's example.

Day 30, you've earned $10, $300 paid, bringing you to 100,300
Day 1 of next month = 100,300 * 0.0365/ 365 = 10.03

Let's say you earned $300 of interest for month A, but since the bank won't credit the payment till the fourth day (first business day is a friday, and then sat/sun, which means the interest will be paid on the fourth day, the Monday) of the next month (month B), that means you are only earning 3.65% p/a on $100000 instead of $100300 for the first 3 days of Month B.

In my scenario:
Day 30, you've earned $10, $300 earned for the month, will be paid on 2nd business day of next month
Day 1 of next month (1st business day) = 100,000 * 0.0365/ 365 = 10.00
Day 2 of next month (non-business day) = 100,000 * 0.0365/ 365 = 10.00
Day 3 of next month (non-business day) = 100,000 * 0.0365/ 365 = 10.00
Day 4 of next month (2nd business day) = 100,300 * 0.0365/ 365 = 10.03

In this scenario, you have already lost $0.09 worth of interest. And lets say if day 4 of the next month is a holiday, you will lose another 3 cents of interest since you won't get the interest payment till day 5. I know it's not alot, but just want to pt that out.

[gman]

I think everyone is missing my point. Let me try again with nfuz's example.

Day 30, you've earned $10, $300 paid, bringing you to 100,300
Day 1 of next month = 100,300 * 0.0365/ 365 = 10.03

Let's say you earned $300 of interest for month A, but since the bank won't credit the payment till the fourth day (first business day is a friday, and then sat/sun, which means the interest will be paid on the fourth day, the Monday) of the next month (month B), that means you are only earning 3.65% p/a on $100000 instead of $100300 for the first 3 days of Month B. Do you get what I mean?

Okay, I think I get your point. First, I am not sure if the bank will do it that way. Even if they do, you are talking about $14 to $48 in 40 years in your example. It is not exactly a lot of money. I would worry about more why one putting $100K in a saving account for 40 years.

[angel_wing0]

Okay, I think I get your point. First, I am not sure if the bank will do it that way. Even if they do, you are talking about $14 to $48 in 40 years in your example. It is not exactly a lot of money. I would worry about more why one putting $100K in a saving account for 40 years.

i donno either. But since the bank calculates interest on daly closing balances, i dont think the interest not paid will count. Or maybe I am wrong :D I have never heard of banks that are like this. ICICI/CTFS/PC all pay on the last business day on the month afaik.

I am just using those factors as examples. :)

[monty613]

hey angel_wing0 - i don't have a lot of interest bearing accounts as i tend to stay fully invested, but the way my cash balance accumulates interest is as follows:

-interest calculated daily, posted monthly
-interest posted the friday after the 16th
-when interest is posted, it is backdated to the 16th

example:

-1%/month (for simplicity's sake)
-deposit $1000 on tuesday september 16th
-$10 interest posted on friday october 17th (posted to account, but backdated thursday october 16th)
-as of october 16th the balance i'm earning interest on is $1010

[angel_wing0]

hey angel_wing0 - i don't have a lot of interest bearing accounts as i tend to stay fully invested, but the way my cash balance accumulates interest is as follows:

-interest calculated daily, posted monthly
-interest posted the friday after the 16th
-when interest is posted, it is backdated to the 16th

example:

-1%/month (for simplicity's sake)
-deposit $1000 on tuesday september 16th
-$10 interest posted on friday october 17th (posted to account, but backdated thursday october 16th)
-as of october 16th the balance i'm earning interest on is $1010

i see, hopefully its like that with hsbc, thanks :)

[angel_wing0]

my cycle ends on the 12th, and today is the 15th (1st business day), hopefully i get my interest payment tmr =\

[nfuz]

my cycle ends on the 12th, and today is the 15th (1st business day), hopefully i get my interest payment tmr =\

Let us know!!

[angel_wing0]

Let us know!!

i better else hsbc will "hear" from me.

[nfuz]

so......

[angel_wing0]

so......

yip, interest paid dated on the 14th (sunday)...