Does anyone have a strategy for handling customers that insist on opening multiple CDs for the same amount (usually small amounts $500 to $1000), ownership, and term? Perhaps a policy? I continue to see customers who want to open 10 cds, same ownership, term, and amount, when one will do and they have no reason other then they have always done it that way. Any feedback will be appreciated.

I've been thinking of several responses when I reread your post and keyed on this:

Quote:

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I continue to see customers who want to open 10 cds, same ownership, term, and amount, when one will do and they have no reason other then they have always done it that way.

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(my emphasis)

This is your real problem. Customers sometimes remain adimant despite our best imput, however you can bet if you won't book the sale the way they like they will find another bank who will. It boils down to are you willing to do the work to retain the customer.

Of course I'll have to ask whether your pricing allows or discourages such behavior. If the customer sees no financial incentive to combine these accounts, why should you expect him to change?

One reason some consumers do this -- They figure that if they have to "cash in" one of the smaller CDs, the penalty won't be as large as if they cashed in a larger one. Depending on how your bank permits early withdrawals (or doesn't) and figures penalties, the consumer's thinking may be right!

We allow for partial withdrawals on certificates, and the penalty is only charged on the amount withdrawn, but customers still insist on opening 10 different $1000 accounts all with the same term. Some say their accountant (or brother, or best friend) told them to do it this way, and have no more information than that.

I really wish we could get them to combine the accounts, because we just end up having to send out 10 maturity letters, when one could do. But Sales doesn't pay the bill for the notices or have to audit the reports, so they don't see any downside to letting the customers do what they want.

We're doing the same things and we hear the same line about that's how their accountant or brother advised them to do it. I appreciate everyone's feedback on this issue. At least I know I'm not the only one annoyed with this issue.

I ran into the same thing except that I finally found out the instructions were to structure (dirty word) the CDs so that one matured every six months. In other words, buy one for six months, one for one year, one for 18 months, etc., etc., so that one would mature every six months and some of the money would be available without penalty at least once every six months. Makes sense to me, plus longer terms generally offer more attractive interest rates. (If you can call today's rates attractive.)

I've seen this called a "ladder", too. As the shorter terms mature, you roll them over into the longest term. Eventually, they'll all be earning the rates for the longest term, but one of them will be no farther than 6 months away if you need the money.

Since no one else has thrown this in, I figure why not.

The word "structuring" came up, so I immediately wonder if these multiple CDs are being funded by cash (especially given the "my accountant told me to" line). I'm guessing that most of the time they are not, but in case they are, (BSA)structuring is definately an appropriate word.

Just a thought from a paranoid security person.