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#1232151 - 08/13/09 04:05 PM Reg DD and Disclosures for Step Up CD's
Jayhawker Offline
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Jayhawker
Joined: Oct 2004
Posts: 93
We are going to start offering a step up CD. If at any time during the term of the CD the rates go up we will allow the customer, 1 time, to opt for the higher rate.

My question, do we have to send new disclosures, or can we simply make the necessary changes on the computer on the bank's end? The customer is getting the disclosures at the inception of the account. Until the rates increase, we wouldn't know what the new rate would be and this is to the benefit of the customer, not to their detriment. What do we need to do???

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#1232291 - 08/13/09 06:21 PM Re: Reg DD and Disclosures for Step Up CD's Jayhawker
Deena Offline
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Deena
Joined: Nov 2000
Posts: 2,701
PA
I think if you disclose it as a variable rate account when it's opened you don't need a change in terms notice.
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#1233330 - 08/14/09 10:51 PM Re: Reg DD and Disclosures for Step Up CD's Deena
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Deena is right. This is a variable rate CD. Disclose it as such and explain how/when it can change. Then you don't have to redisclose anything.
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David Dickinson
http://www.bankerscompliance.com

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#1237828 - 08/24/09 04:54 PM Re: Reg DD and Disclosures for Step Up CD's Jayhawker
Jayhawker Offline
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Jayhawker
Joined: Oct 2004
Posts: 93
Okay, so a variable rate CD is "A certificate of deposit permitting one or more rate adjustments prior to maturity at the consumer's option..." A CD that allows the customer at their option to bump up the rate (one time), if the rates go up during the term (15 months) is a variable rate??? Right??? What about if we structure the CD such that if the rates go up and the customer wants the higher rate, the CD term will now run for another 15 month term. Is this variable or, is it fixed??? Would giving new disclosures at the time of the new rate adjustment be sufficient and make it a fixed rate??

We are trying to do a new CD product and we currently don't offer variable rate CDs so I need to know if both of the above mentioned options are variable rate. IF SO--how do we complete the TIS disclosure for (and other relevant documents) variable rate disclosures???

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#1239613 - 08/26/09 05:32 PM Re: Reg DD and Disclosures for Step Up CD's Jayhawker
Jayhawker Offline
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Jayhawker
Joined: Oct 2004
Posts: 93
Does anyone out there have an answer for my question directly above this post? I need an answer quickly if anyone has one.

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