Financial Consumer Agency of Canada
www.fcac-acfc.gc.ca
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Savings Accounts
Calculation method C2
With this method, the financial institution applies a different interest rate to each tier of the balance.
Example 2
You have $1,200 in your account. This is the account description:
- Tier 1: 1% - $0 to $1,000
- Tier 2: 2% - $1,001 and up
Interest is calculated as follows:
- Balance: $1,200
- Interest for Tier 1: 1% applied on $1,000
- Interest for Tier 2: 2% applied on $200
- Total balance with interest compounded after one year: $1,214
Therefore, with method C2, if you have $1,200 in your account, 1 percent interest rate is applied on the amount of your balance from $0 to $1,000. The remaining part of your balance – $200 – is in a higher tier – $1,001 to $1,200 – with an interest rate of 2 percent.
