The bank is offering liquid CDs that they initially considered "tiered" due to the rate depending on the amount of the CD. (ie: <$100M, $100M<$250M, >$250M) Reg DD specifically states a time deposit is not tiered if it's dependent on the initial deposit, which is what these are since the rate is dependent on the initial deposit. We are having a hard time with the "minimum to open the account" section. Our Systems department is saying it's only $1,000 since the CD is coded as the same product on their side and it's $1,000 for the lowest rate CD and that's how it would be determined but Compliance is saying it's whatever the minimum is to open that particular CD at that rate is regardless of in-house bank coding. For example, minimum to receive a rate on one is $250M, so Compliance is saying $250M is the minimum amount required to open the CD for that rate, which is fixed and stands on its own since it's not a tiered rate. Systems is saying that it would be $1,000 and they would just be dropped into a lesser rate. Thoughts?

If you need to open the account with $250K to get that interest rate than how can you disclose $1K to obtain the annual percentage yield disclosed?

(3) Balance information. (i) Minimum balance requirements. (A) Any minimum balance required to:

(1) Open the account;

(2) Avoid the imposition of a fee; or

(3) Obtain the annual percentage yield disclosed.

The balance required to open the account is $1,000.

The balance required to obtain the APY disclosed is $250,000.

Two separate disclosure items.

If the customer opened the account with $1,000, then they would be obtaining a different rate that prints on the TISD. In Compliance's opinion, it is viewed almost as having three separate products. The customer cannot deposit $1,000 and obtain that particular TISD with that rate. It is a liquid CD so they are allowed to make x number of withdrawals and if the balance goes below $1000 then the CD is closed. So the section on what they need to maintain in order to obtain the APY is $1,000 since their initial deposit only needs to be at certain amounts to obtain the rate but can dip to $1,000 before it is closed.

Does the rate change is one of my withdrawals takes me to a lower tier, and if so, are you disclosing this as a variable rate account?

No, the rate will not change. It will still stay fixed at the rate dependent on the initial deposit but it can go all the way down to $1,000 before it is closed.

That is why I was leaning towards an opening balance requirement in my first post. While they can open an account for $1,000 - they cannot get the APY on that account for the term of the CD without opening it with $250,000. This is not like a variable rate account based on the current balance. A balance to obtain the APY is not required, because they can allow the balance to drop to $1,000.00. However, without the opening deposit, they can't get the rate.