Interest Calculation

How your interest is calculated

For 1 to 5 year Bridgewater Bank GICs, interest is paid depending on the interest payment option you select. On GICs with terms of one year or longer, interest is calculated daily on the principal amount and can either be paid monthly, annually, or compounded annually and paid at maturity. On GIC  terms of less than one year, interest is calculated daily on the principal amount and is paid at maturity.

You have the option to have interest paid to you via electronic funds transfer (EFT) or by cheque either annually or at maturity.

Example: A $100,000 GIC with a 2% GIC interest rate on a 2-year term:

Paid annually

GIC interest rates paid annually means that you’ll receive your return (interest) each year. The benefit of this option is that you can enjoy the combination of a guaranteed principal, while receiving a lump sum of interest earned at the end of the year.

The principal amount multiplied by the GIC interest rate: a $100,000 investment at 2% = $2,000 paid to you each year.

Paid at maturity

GIC interest rates paid at maturity means you’ll receive your earnings (principal with interest) at the end of your term. However, each year your interest is compounded. The benefit? The interest you earn each year will be re-invested which means more money in your pocket when your GIC matures.

Year 1: The principal amount multiplied by the GIC interest rate: a $100,000 investment at 2% = $2,000.
Year 2: The (new) principal amount multiplied by the GIC interest rate: a $102,000 investment at 2% = $2,040. The total interest owed to you at maturity = $4,040.00

Paid monthly

GIC interest rates paid monthly means you’ll receive your interest on the principal amount each month. The benefit of this option is seeing the fruits of your investment earlier on than an annual option – who wouldn’t want to see a few extra dollars in their account each month!

Year 1: The principal amount multiplied by the GIC interest rate: a $100,000 investment at 2% ÷ 12 = $166.67/month.
Year 2: Same as above as the principal won’t change.

Reviewing your investment or updating your details is easy with Bridgewater Bank. Just contact us or connect with your deposit broker/investment advisor. We’re both here to help.