Hello BankersOnline friends,

If a bank is offering CD products with a "10 day rate guarantee" - where if the bank increases the rate offered on a CD product a customer opened within 10 days of account opening, the bank will automatically increase their rate to the better rate. And, the rate increase is retroactive to their account opening date - this is where my questions resides.

* Assume the bank always issues monthly statements for CDs, with the interest payment cycle also being monthly and paid at month-end.
* A customer opens a 12-month CD account near the end of the month of May, on 05/28 with a .55% interest rate. On 06/04, the bank increased the rate for the 12-month CD to .60%.
* Customer gets a May deposit statement for 05/28 thru 05/31, and it accurately reflects the .55% interest rate in terms of the interest payment and APYE.
* Customer then benefits from the rate increase to their CD product to .60% on 06/04 (10 day Rate Guarantee). The June statement will be based on the new increased interest rate. However, since the interest rate increase was retroactive, the customer will also get an additional interest payment shown on June 1, for the difference of interest paid in May based on the .55% rate versus the interest earned at the .60% rate.

The question is on how that adjusted interest is displaying on the June statement. In Appendix A of Reg DD, it indicates that if interest payments are based on a balance/period other than the statement period, the statement must indicate that balance/period. The June month-end interest payment and APYE are correct based on the new interest rate, however there is still the first interest payment shown on June 1 - does this need to indicate what it was based on? Seems especially complicated given that it's the difference of interest paid from the previous month at a different rate.

Has anyone else encountered this? Do you possibly change the transaction description to indicate "May interest payment adjustment" or something similar? Looking for any help on this. I'm of the opinion that both statements are accurate based on the applicable rate when they dropped, and that the increase and additional interest payment are a benefit to the customer with no other action required. Not all agree with this opinion.