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Leap Day/Year Specials

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Leap Day/Year Specials

As I’m sure you’re all aware, 2016 is a Leap Year. Like any other holiday or significant calendar date, Leap Day (February 29) is used as a marketing tool by a variety of retailers. A quick search on the Internet yielded Leap Day deals at restaurants, bars, hotels, resorts, and other entertainment venues, many of which included "29" in a special price or discount.

While getting 29% off my entire check at Denny’s would be nice, I was much more interested in the Leap Day CD deals I found. I’ve just written about two of them (Credit Union of New Jersey’s 4-Year Certificate, 2.90% APY and S&T Bank’s 1-Year CD Special, 1.59% APY), but I’m finding more as the day goes on.

Rather than write about each and every one of these "one-day wonders," I’ve decided to start a summary list and would encourage all of you to let me know about any Leap Day/Year deals you find. Here are the latest two entries to the list:

  • Michigan’s Central Macomb Community Credit Union is offering a 16-month CD (1.16% APY). Minimum deposit is $500.
  • Northern Florida’s Country Federal Credit Union is offering a 60-month CD (2.32% APY). Minimum deposit is $500.
  • Leap Year Facts

    There's a specific reason I included this information. If you're not interested in reading the Leap Year Facts, just scroll down to "How Do You Determine Interest In A Leap Year?" section.

    From TimeandDate.com: "Leap years are needed to keep our modern day Gregorian calendar in alignment with the Earth's revolutions around the sun. It takes the Earth approximately 365.242189 days – or 365 days, 5 hours, 48 minutes, and 45 seconds – to circle once around the Sun. This is called a tropical year, and is measured from the March equinox.

    However, the Gregorian calendar has only 365 days in a year, so if we didn't add a leap day on February 29 nearly every four years, we would lose almost six hours off our calendar every year. After only 100 years, our calendar would be off by around 24 days!

    Roman general Julius Caesar introduced the first leap years over 2000 years ago. But the Julian calendar had only one rule: any year evenly divisible by four would be a leap year. This formula produced way too many leap years, but was not corrected until the introduction of the Gregorian calendar more than 1500 years later."

    From Wikipedia: "The name ‘leap year’ comes from the fact that while a fixed date in the Gregorian calendar normally advances one day of the week from one year to the next, the day of the week in a leap year will advance two days (from March onwards) due to the extra day added at the end of February (thus "leaping over" one of the days in the week). For example, Christmas fell on Tuesday in 2001, Wednesday in 2002, and Thursday in 2003 but then ‘leapt’ over Friday to fall on a Saturday in 2004."

    How Do You Determine Interest In A Leap Year?

    At the risk of sounding glib, I think the answer may be "very carefully." The Code of Federal Regulations, Title 12 – Banks and Banking, Appendix A to Part 230-Annual Percentage Yield Calculation, states in a footnote:

    Institutions may calculate the annual percentage yield
    based on a 365-day or a 366-day year in a leap year.

    How does that translate into dollars and cents? For this example, I used S&T Bank’s 1-Year CD Leap Year Special, earning 1.59% APY.

  • 365-day year - $100K deposited in 2016 will earn approximately $1,594.36.
  • 366-day year - $100K deposited in 2016 will earn approximately $1,590.00.
  • If you would like an in-depth analysis of the mathematics involved in compound interest, I recommend this paper out of Purdue University.

    To search for nationwide CD rates and CD rates in your state, please refer to the CD rates section of DepositAccounts.com or our new Rates Map page.

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    Comments
    CLASS OF '64
    CLASS OF '64 (anonymous)   |     |   Comment #1
    HAIL HAIL TO OLE PURDUE

    OH HAIL TO MY OLE GOLD AND BLACK

    HAIL HAIL TO OLE PURDUE

    MY FRIENDSHIP MAY SHE NEVER LACK

    EVER FAITHFUL

    EVER TRUE

    THUS I SING THE SONG A NEW

    OF THE DAYS I SPENT WITH YOU

    OH HAIL OH HAIL PURDUE  :)
    Anonymous
    Anonymous   |     |   Comment #2
    Leaping for joy!  My birthday falls on 2/29 so will be celebrating my 15th birthday on Monday, wrinkles on face in the mirror notwithstanding.
    Carpline
    Carpline   |     |   Comment #4
    Happy Birthday, Leapling!
    Anonymous
    Anonymous   |     |   Comment #3
    Fun fact: How to determine if a year is a leap year using the Gregorian calendar.
    Rule #1: A year is a leap year if it is even divisible by 4, unless:
    Rule #2: A year is not a leap year if is evenly divisible by 100, unless:
    Rule #3: A year is a leap year if it is evenly divisible by 400.
    The year 2000 was a leap year because of rule #3, 1900 was not because of rule #2 and the year 2100 will not be a leap year because of rule #2.
    Anonymous
    Anonymous   |     |   Comment #5
    Any banks still do continuous compounding?
    Anonymous
    Anonymous   |     |   Comment #6
    Unlikely since it'd require identifying the time of day a deposit or withdrawl occurred and most banks only care to track by day. Also the typical person is more apt to be confused by the concept. I think the equation is P*e^RT.
    Anonymous
    Anonymous   |     |   Comment #7
    Interest during leap years is fine provided your money actually is on deposit on leap day.  If it is, everything works out.

    I have a large 5 year CD which matures quite soon, early in March.  There is nothing so edifying as having been shot at and missed.  But until reading Ken's piece here, my good fortune had not prior occurred to me, not at any time in the last (almost) five years!

    A leap year does not have awareness it's a leap year until leap day comes along and dope slaps it! 
    Anonymous
    Anonymous   |     |   Comment #8
    Thanks for the heads up re Leap Year specials.  I just did a Google search of "leap year CD interest" and limited the search to info from last week.  You can find a lot of advertised specials.  The top one is Miramar Federal Credit Union for military folks, advertising a 2.29% APY for 18 month CD with $1000 minimum.  I wish I were eligible.
    CLASS OF '64
    CLASS OF '64 (anonymous)   |     |   Comment #11
    APPOLOGIES AND REGRETS REGARDING MY PURDUE POSTINGS (JUST CELEBRATING THE USE OF THE PURDUE MATH EQUATION FOR LEAP YEAR INTEREST)

    A QUESTION THAT I POSE IS THAT WHY DO SOME INSTITUTIONS USE A 360 DAY CALENDAR FOR INTEREST CALCULATIONS (MOSTLY ON BONDS)?

    AGAIN, SORRY FOR THE PURDUE SPAM
    Carpline
    Carpline   |     |   Comment #12
    I almost responded with "Hail, to the Victors Valiant," but I sung it in my head instead.  Your Purdue song made me smile.
    CLASS OF '64
    CLASS OF '64 (anonymous)   |     |   Comment #13
    Michigan beat us (PURDUE) 12 years in a row in football--so congrats on that valiant Carpline

    However, to avoid being labeled spam--I pose a question related to the subject matter--

    Why cant brokered CDs pay "required minimum distributions" (RMD) if held in an IRA? 
    Anonymous
    Anonymous   |     |   Comment #14
    Many brokered CD's post interest to the account twice a year. This money can be withdrawn. If the amount doesn't cover RMD and there are no other sources for the required RMD withdrawal, you have a problem. Remember, RMD can come from multiple sources across multiple tax-deferred retirement accounts. Proper planning is the key because RMD penalties can be severe. 
    class of '64
    class of '64 (anonymous)   |     |   Comment #15
    Excellent point!  But, it does mean I have to keep a minimum of "cash" in some IRA account to cover RMD for brokered CDs.

    thanks for input--