| Title: | DCU |
| Notice: | 1996 BoD Election results in 1004 |
| Moderator: | CPEEDY::BRADLEY |
| Created: | Sat Feb 07 1987 |
| Last Modified: | Fri Jun 06 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1041 |
| Total number of notes: | 18759 |
The recent articles on Savings Bonds and the many "gotcha's" on
savings bonds prompted me to post this note. For example, though
interest is 6% if held for some minimum perid of time, interest
is paid only on a six month basis. If you cash in the bonds after
N years + 5 months and 29 days, you don't get for the 5+ months.
(The calculation of how interests is paid for loans is governed by
federal law and is explicitly stated on loan agreements.)
What appears to be simple can be quite complex. Can anyone answer the
following questions:
1. How is the minimum balance required to earn interest determined?
Is it the absolute minimum during the month or is it an
average daily balance? This becomes extremely important as huge
amounts are deposited by Digital for departing employees.
2. How is interested calculated with varying amounts in the
account? Is it average daily balance, minimum balance or
some other method? I was a member of a credit union where
interest was calculated based on the MINIMUM balance for
the month.
3. Does question 1 and 2 apply on a monthly basis or on
a quarterly basis? I.E. if the balance drops below the
minimum do I lose interest for the month or entire quarter?
4. How frequently is interest posted to the account and hence
available for compounding?
The current Board has been extremely forthcoming with information and
in no way should this note be interpreted negatively.
Gim
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 625.1 | Answers to my own questions | SLOAN::HOM | Tue Jul 23 1996 23:39 | 47 | |
> What appears to be simple can be quite complex. Can anyone answer the
> following questions:
>
> 1. How is the minimum balance required to earn interest determined?
> Is it the absolute minimum during the month or is it an
> average daily balance? This becomes extremely important as huge
> amounts are deposited by Digital for departing employees.
Any day where the balance exceeeds $1,000 earns interest.
> 2. How is interested calculated with varying amounts in the
> account? Is it average daily balance, minimum balance or
> some other method? I was a member of a credit union where
> interest was calculated based on the MINIMUM balance for
> the month.
Interest is calculated daily on any day where the balance exceeds
$1,000.
>
> 3. Does question 1 and 2 apply on a monthly basis or on
> a quarterly basis? I.E. if the balance drops below the
> minimum do I lose interest for the month or entire quarter?
If balance drops below $1,000 you don't earn interest for that day.
>
> 4. How frequently is interest posted to the account and hence
> available for compounding?
Interest is posted quarterly but compounded daily.
The above is based on the DCU Truth in Saving Disclosure Effective
4/3/95, page 3:
"... dividends will be compounded daily and credited on the last
Sunday of each calendar quarter. ...
Dividends are calculated usng the daily balance method which applies
a daily periodic rate to the balance in the account each day, provided
minimum balance requirements, if applicable, are met."
Gim
PS - Should be there be differences between what I have posted and
official DCU documents, the DCU documents will prevail.
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| 625.2 | Good! | WRKSYS::SEILER | Larry Seiler | Wed Jul 24 1996 12:55 | 7 |
Speaking as a member, I like these answers! I've heard of banks that
said they give you interest on "the maximum amount that you have
in your account all month", in other words, the MINIMUM amount.
I am very glad to be part of a CU that doesn't play those games.
Enjoy,
Larry
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