Question: Does a certificate of deposit require a signature card and deposit agreement? If so, does it require a new one if the same customers purchase several CDs over a period of time and they are all styled the same?
Answer: A certificate of deposit does not require a signature card. For years, it has been tradition in the banking industry not to use signature cards with CDs. CDs represent an obligation of your bank. In the past, the terms have often been included on the CD itself. Now that book-entry CDs are gaining popularity, new ways have to be found to document the terms and some banks are deciding to go with written deposit contracts or signature cards for CDs for the first time.
If you do decide to begin using a signature card, think carefully about what its wording should be. You may have situations where a grandmother chooses to purchase a CD and put her grown children on as joint owners. You can create an ambiguous record if your book-entry documentation shows all the named joint owners, but the signature card only has one party signing as the owner. Make sure your CD signature card is clear about who the real owners are.
The original version appeared in the April 2002 edition of the Oklahoma Bankers Association Compliance Informer.
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