Truth in Savings Disclosures For Renewable CDs
by Mary Beth Guard
Question: I have a question about the Truth in Savings disclosures that must be made on automatically renewable CDs with a term of 12 months or longer. Explain, please, the 12 month or longer CD disclosures that need to be mailed to the customer when the CD matures. I have a few questions regarding this. What information needs to be on the disclosure? Is it best to just print out the same disclosure that the customer was given at the time of original opening? If not, does the interest rate and maturity date need to be on it? We were wondering if we could just print out a generic disclosure that would tell how the interest was to be paid and mail that or does it need to have the specifics of that particular CD? We want to comply, but also want to try and make it as simple as possible for us.
Answer: This is covered in Part 230.5 of Reg DD, which states:
"If the maturity is longer than one year, the institution shall provide account disclosures set forth in Sec. 230.4(b) of this part for the new account, along with the date the existing account matures. If the interest rate and annual percentage yield that will be paid for the new account are unknown when disclosures are provided, the institution shall state that those rates have not yet been determined, the date when they will be determined, and a telephone number consumers may call to obtain the interest rate and the annual percentage yield that will be paid for the new account. "
This means that you must provide the same type of full account disclosure you provided on the CD at the time it was originally purchased, describing all of the information you are required to include under Section 230.4, with one exception: if you don't know, at the time of required mailing/delivery what the rate is going to be, you must instead include a statement that tells the customer the date when the rate will be determined and provide a telephone number the consumer can call to obtain the interest rate and the annual percentage yield that will be paid for the new account.
In addition, your disclosure must also include information about the date the existing CD matures.
In terms of timing, the disclosures must be mailed or delivered at least 30 calendar days before maturity of the existing account. Alternatively, the disclosures may be mailed or delivered at least 20 calendar days before the end of the grace period on the existing account, provided a grace period of at least five calendar days is allowed.
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