I posted this in another section, but thought I would post here also - I have a customer who has inquired about using our internet banking to transfer funds from her DDA to her College CD (additional deposits are allowed) instead of coming to the bank to do that. Our system has the ability to allow this. Can anyone tell me if this would cause any regulatory issues or problems for us if we allowed our customers to do this? I am having trouble finding any informatin regarding electronic deposits to CD's. Any help would be appreciated!! Thanks. Nan

I don't know of any regulatory prohibitions to limiting deposits to CDs, only limits on withdrawals. Would your system accomodate deposits without allowing withdrawals?

There should be no problems. CD's are exempt from the periodic statement requirements of Reg DD and intra-institutional transfers are exempt from the periodic statement requirements of Reg. E as long as the transfer is shown on one of the accounts (the DDA account).

One other minor caveat: Be sure your system handles any potential early withdrawal penalties properly. Each deposit to the CD resets the day counter for the penalty provision.

It is fairly common to have penalty-free withdrawals from an Educational CD if the funds are being used for education expenses. If this is the case in Nans' sceario, I wouldn't think resetting the day counter on Ed CDs would be an issue.

A CD is a CD - educational or not - they are still govern under Reg D and require the minimum penalty of seven days for any withdrawal within six days of the last deposit.

Thank you. We can restrict the system to allow transfer credits only. I appreciate your input. Nan

Let me restate my point. I just wanted you to be sure that any of the transfer credits into the CD account would reset the "date last deposit" for the CD and that your system checks that date to determine whether more than 6 days had elapsed when a request for an early withdrawal is being processed.