Quote:
Originally Posted by mathjak107
you need to fully understand what your deal is on these escalator gic's .. they ramp up from very low to the final amount and it may actually be less then getting a fixed rate yearly .
back in august this one was structured like this : you can see year one starts at 1.80%. you don't see the 3.35% offered until the 5th year and you only get it for that one year
5-Year Escalator Term Deposit (Rates effective 2019-08-06)
Rates
5-Year Escalator: year 1 annual interest
1.80%
5-Year Escalator: year 2 annual interest
2.20%
5-Year Escalator: year 3 annual interest
2.40%
5-Year Escalator: year 4 annual interest
2.75%
5-Year Escalator: year 5 annual interest
3.35%
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No, when comparing that escalator you specified while calculating those exact escalating interest rates(or any variation of rates that equals to an average of 2.5% per year as yours does for a 5 year term) to a fixed rate GIC of 2.5% per year for 5 years, the difference at maturity for lets says a $30,000 GIC would be almost the same with the escalator term only making a few dollars less at maturity, thats peanuts in difference you lose at maturity.
BUT the GIC I placed yesterday was at 2.25% per year whereas their escalator averages 2.75% per year, that means I would make around .5% more in interest every year compounded yearly for 5 years. Thats a more than $750 more at maturity. But I also renewed another 30 k term at the same time yesterday for that same 2.25 per year for 5 year term, so if both GIC's were to be changed to that escalator that averages 2.75%, I will make over $1500 more. I hope the interest doesnt drop by friday, and if it does I believe it would be required for this bank to meet that higher interest rate since their bank teller/signing officer made a mistake. I would not have invested in those 2.25% terms had she informed me of that escalator term that averages 2.75% in which she was suppose to because I asked her before signing and giving the cheque which GIC terms offer the highest interest rates for a 1, 3 or 5 year term.