We have previously offered "Almost Prime" CDs based on WSJP less a margin dependent on the length of the term. Several years ago (7+) the bank stopped taking new deposits for this product but continued to maintain the existing CDs. Fast forward to today and the bank would like to move forward with discontinuing the product entirely.

The language in the agreement states: This account will automatically renew. You have 10 calendar days after the maturity date to withdraw funds without penalty. If you do not withdraw the funds, each renewal term will be for an identical period of time as the original term.

Further down in another paragraph: AUTOMATIC RENEWAL POLICY. If the account will automatically renew as described above, all amounts not withdrawn will automatically renew on each Maturity Date for the term described above in the Time Account Information section. We will calculate interest on a renewed account at the interest rate in effect for time deposits with the same Deposit Amount and term. If you want to withdraw money from the Account, you must notify us during the grace period after Maturity Date.

Our current CD product offerings match the length of term of the CDs in the "Almost Prime" category. The language for auto renewal repeatedly states it will renew for the same term - which is not an issue. My sticky point comes with changing the CDs from variable to fixed rate. But on the flip side of that, in the paragraph above, it states that we will calculate interest on a renewed account at the interest rate in effect for time deposits with the same Deposit Amount and term. The current interest rate in effect for that amount and term is a fixed rate. Are we good with this change? I have read the Reg DD disclosure requirements so in addition to the current disclosures for the fixed CD it will renew to, what additionally do I need to include? A courtesy letter explaining the change in more detail along with their options should they decide they do not want the new offering?

Thoughts would be appreciated - especially if I'm way off base - thanks!

You send them the terms of the new CD before renewal in the renewal notice - if they don't like them, they can cash them in. A letter explaining the discontinuing of the product would be a nice touch.

Thank you Randy - I always appreciate your concise insight.

I want to verify that we CAN offer a 13 month CD that will automatically renew as a 12 month CD....we will disclose this in the original TIS.....and again before it automatically renews....

Is there any issue with doing this?

No.

Thanks for confirming that for me, Randy!!!!