Truth In Savings Disclosure

Posted By: rescue me

Truth In Savings Disclosure - 06/23/17 07:30 PM

Ok...I need some help. For Certificate of Deposits (CD's), do we need to state the early withdrawal of "seven days interest on the amount withdrawn if the withdrawal is made within the first six days after the deposit". I can not find it in the regulation that this is required and I thought it always was. We switched to a different software company that has the TIS disclosure on the CD, and this information is not on it. We do have a separate TIS disclosure that we hand out, but if we don't have to give the customer another piece of paper would be better!

Thank you in advance
Posted By: rlcarey

Re: Truth In Savings Disclosure - 06/23/17 07:57 PM

Early withdrawal penalties must be disclosed.

1030.4(b)(6) Features of time accounts. For time accounts:

(ii) Early withdrawal penalties. A statement that a penalty will or may be imposed for early withdrawal, how it is calculated, and the conditions for its assessment.
Posted By: John Burnett

Re: Truth In Savings Disclosure - 06/23/17 08:07 PM

It's supposed to reflect whatever penalty provision you have in your contract, not the minimum penalty that you have to impose under Regulation D.
Posted By: rescue me

Re: Truth In Savings Disclosure - 06/26/17 12:21 PM

Thank so much for the feed back. I thought 7 days interest was required by the regulation.
Posted By: rescue me

Re: Truth In Savings Disclosure - 06/26/17 12:28 PM

John
I think I understand it now. As long as we state that we charge an early withdrawal penalty and it is more than 7 days interest, no matter if they close the CD with in 6 days or 3 months, we should be ok correct? We should be compliant with Reg. D and DD. I am thinking right?

Thank you
Posted By: John Burnett

Re: Truth In Savings Disclosure - 06/26/17 06:39 PM

The CD contract will include an early withdrawal penalty provision. That penalty must be at least as great as the penalty required by the regulation. With interest rates trending slowly upward, you will want to have a penalty provision that doesn't make it easy for a customer to "trade" a very low rate CD for one carrying a higher rate.

In your disclosures, you will state that there is a penalty for early withdrawal and how it is to be calculated. For example you could say that there will be a penalty of 30 days' interest at the rate on the CD for any full or partial early withdrawal (if that's what the contract calls for).