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#2264378 - 01/06/22 05:08 PM CD-Interest accrued during grace period
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Diamond Poster
Joined: Nov 2008
Posts: 1,107
In the mountains
Scenario: Auto renewal CD with a 10 day grace period for withdrawals without penalty. It is disclosed that if the account is closed before interest is credited, the customer will be paid the accrued interest. If the customer redeems the CD any day during the grace period, is the customer owed the interest that is accruing for those days? Or if the CD is redeemed anytime during the grace period, does this mean that technically the CD didn't auto renew, so they aren't really earning interest for the new term?

Thanks in advance.
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Operations Compliance
#2264381 - 01/06/22 05:12 PM Re: CD-Interest accrued during grace period Likes to Comply
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Diamond Poster
Joined: Nov 2008
Posts: 1,107
In the mountains
Never mind - I found my answer -

5. Maturity of time accounts. Institutions are not required to pay interest after time accounts mature. (See 12 CFR Part 217, Regulation Q of the Board of Governors of the Federal Reserve System, for limitations on duration of interest payments.)

Examples include:

i. During a grace period offered for an automatically renewable time account, if consumers decide during that period not to renew the account.
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#2264498 - 01/08/22 02:16 AM Re: CD-Interest accrued during grace period Likes to Comply
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Always check state law (including case law) when an issue touches on contract compliance or fair business practices. Just because federal laws/regs don't stand in the way, that doesn't trump state law.
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