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#773154 - 07/12/07 02:05 PM Reg DD - Club Accounts
Summer101 Offline
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Joined: Jun 2001
Posts: 644
Can someone explain what this means, i.e., why was this specified in the commentary?

Reg DD Commentary 230.2(u)C-1

"Club Accounts. Although club accounts typically have a maturity date, they are not time accounts unless they also require a penalty of at least seven days' interest for withdrawals during the first six days after the account is opened."

Thanks!!

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General Discussion
#773208 - 07/12/07 02:36 PM Re: Reg DD - Club Accounts Summer101
A_G Offline
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Posts: 18,989
Most club accounts pay out at the end of a specified period. My guess is the commentary is to let us know that club accounts are not equal to CDs for DD purposes - unless the penalty is imposed. Although there is a "maturity date" (that's not what I would call it though) the club account is most likely equal to a savings account.
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#773274 - 07/12/07 03:29 PM Re: Reg DD - Club Accounts A_G
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
A club account can be a time deposit or a savings account, depending on (1) whether it has a defined maturity date, and (2) whether you impose an early withdrawal penalty. I think the comment is there in Reg. DD to alert the reader to the fact that disclosure requirements (and ad requirements, if anyone ever uses a trigger term in a club deposit ad) will vary depending on whether the club account qualifies as a time deposit or savings account.

Back when there was a reserve requirement advantage to having an account classed as a time deposit, banks tried to make their club accounts qualify by imposing the penalty and fixing the maturity date. Today it doesn't matter, so I think more banks structure them as savings accounts.

Frankly, I'm amazed that they survive as a salable product.
Last edited by John Burnett; 07/12/07 03:29 PM.
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#773286 - 07/12/07 03:37 PM Re: Reg DD - Club Accounts John Burnett
A_G Offline
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Joined: Jul 2004
Posts: 18,989
Originally Posted By: John Burnett
Frankly, I'm amazed that they survive as a salable product.


Really? We have people come here for the sole purpose of starting a club account. They are quite popular here. However, I really don't know the difference between one and starting a "regular" account by putting x dollars away per week, or however a particular club account might work. But in the minds of the people there is a difference.
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#773495 - 07/12/07 05:49 PM Re: Reg DD - Club Accounts John Burnett
Summer101 Offline
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Our club accounts have a maturity date and we charge a penalty if the account is closed before maturity. The penalty is small but its far in excess of 7 days interest based on the rate currently being paid.

Since we have the accounts set up to automatically renew, it appears we need to send out a notice 30 days in advance telling the customer the new maturity date and rate. This would be the same regardless of whether they were classified as a savings or time deposit, correct?

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#773516 - 07/12/07 05:58 PM Re: Reg DD - Club Accounts Summer101
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
If they are savings accounts, they don't require a maturity notice because they don't really mature. And the maturity notice requirements only apply to time deposits.

For the time deposit club account, 30 days advance unless there's a grace period of up to ten days. Then it's 20 days before the end of the grace period. Just like the "real" time accounts.
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#775480 - 07/16/07 12:11 PM Re: Reg DD - Club Accounts John Burnett
Summer101 Offline
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Joined: Jun 2001
Posts: 644
Reg D, 204.2(c)(1)(D) says ""Time Deposit" includes funds held in "club" accounts (such as "Christmas club" accounts and "vacation club" accounts that are not maintained as "savings deposits")that are deposited under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period of not less that three months even though some of the deposits may be made within six days from the end of the period."

Is this saying the club account will still be considered a "time deposit" even though an early withdrawal penalty is not charged when deposits are made (by whatever means including AFTs) within six days of the maturity payout withdrawal?

Thanks.

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#2193069 - 09/19/18 03:48 PM Re: Reg DD - Club Accounts Summer101
ineedhelp Offline
100 Club
Joined: Mar 2014
Posts: 169
Does anyone out there offer a club account that is defined by the customer and they can choose the "maturity date"? Boss mentioned doing various clubs for customers to use for things they have to pay annually such as their college kids' tuition. Rather than having to create many various products, I was wondering if anyone knew of a way to have one account that could be used that would allow the customer to select the date the check would cut giving them their principal amount and the interest that had accrued. Operations said it was an issue because of cycles???

Any thoughts or if this is even something that could be achieved?

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#2193418 - 09/21/18 07:32 PM Re: Reg DD - Club Accounts Summer101
LetsTalkCompliance Offline
Member
Joined: Jan 2016
Posts: 60
We offer a Christmas club account, but we define the maturity date as the first Friday of October when the check will be cut and mailed to the customer. We do not have a customer-defined maturity date product. I am interested if others do.

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