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#54963 - 01/16/03 08:37 PM
Re: Reg DD APY Help Needed
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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This is a stepped-rate product. Step one is the 2.96% for the first 6 months. Step two is the "normal" rate today, assuming that this will not change over the 12 months to the end of the one-year assumed period.
So, if your non-bonus rate for this product is today 1.00%, you figure interest for 6 months at 2.96%, then add interest for the balance of the year at 1.00%, and then apply your APY formula. You'll obviously get a rate somewhere around 2.00% APY (about half-way between).
But note: This works if each account opened gets 6 months at the introductory rate and then reverts to the normal rate. But if your introductory rate period ends on a specific date (say July 16, which is 6 months from today) and all accounts opened in the next three months will change to the normal rate on 7/16, you have a nightmare on your hands.
That's because the number of days the intro rate will run gets smaller each day, and the number of days for the normal rate gets larger. So the APY changes every day.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#54965 - 01/16/03 09:33 PM
Re: Reg DD APY Help Needed
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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My pleasure. Now all you have to do is convince your marketing people that you have to use the full year's interest. Your "ammo" can be found in Appendix A, in the first paragraph under heading "A. General Rules" and reads as follows:
Except as provided in Part I.E. of this appendix, the annual percentage yield shall be calculated by the formula shown below. Institutions shall calculate the annual percentage yield based on the actual number of days in the term of the account. For accounts without a stated maturity date (such as a typical savings or transaction account), the calculation shall be based on an assumed term of 365 days.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#54967 - 01/17/03 02:18 PM
Re: Reg DD APY Help Needed
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Given the way the account is designed and the 6-month term of the "teaser" rate, they'd have to be paying a lot more for the teaser than 2.96% interest rate to get a blended APY of 3.00%. What is your standard rate today?
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#54969 - 01/17/03 02:46 PM
Re: Reg DD APY Help Needed
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Just don't forget what your parents used to say when your marketing department points out that "everyone else is doing it." You remember -- something about following "everyone else" when they jump off the Empire State Building.
I know I'm preaching to the choir when I say your regulator won't acknowledge the "everyone else is doing it" defense.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#54971 - 01/17/03 03:11 PM
Re: Reg DD APY Help Needed
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10K Club
Joined: Oct 2000
Posts: 10,180
Toano, VA
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Kathleen- I've presented Internet compliance seminars for 8 years, and the highlight has always been the live examples of other banks violating all your favorite laws and regulations on their websites. There has never been a shortage of examples! Other banks do things wrong all the time......and then there are credit unions.
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...gone fishing.
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#54972 - 01/17/03 03:12 PM
Re: Reg DD APY Help Needed
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Joined: Sep 2002
Posts: 13,965
TN
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It's funny that this came up this morning. My mother called me (she's almost 78) about another bank's advertising a Callable CD. She contacted them and discovered that it was 36 months but she stated to me that the ad didn't say that and wanted to check and see if it should.
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#54973 - 02/26/03 03:44 PM
Re: REG DD: APY Help Needed
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10K Club
Joined: Sep 2002
Posts: 13,965
TN
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Now I need some help with a stepped-rate CD disclosure. We're planning on offering a new stepped rate product and I've never dealt with one before. Of course I find this out this morning and they're wanting to roll it out on Friday and I'm already totally frustrated with HMDA (CRA was finished yesterday).
On our initial disclosures are we required to list all rates for the 36 month period (changing every 6 months) and then the blended APY? Any help or reference would be appreciated.
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