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:
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.
If you would like an in-depth analysis of the mathematics involved in compound interest, I recommend this paper out of Purdue University.