Reissuing CD's during the CD Term

Posted By: wmb

Reissuing CD's during the CD Term - 08/10/11 04:05 PM

At our bank, our normal process for reissuing CD's during the CD term is that the customer would have to close the existing CD and open a new one with a new term & the rate we offer at the time, but do not charge a bank penalty. the only exception is death.

Recently we had a trust customer that created a new trust w/ a new TIN that wanted to have CD's that were titled in another trust be reissued to the new trust. The trustee's are the same as the old trust. We said no; that they would have to close the old CD's (w/out bank penalty) and move the funds into new CD's at the rates we are offering today.

I would like to get some feedback on how other institutions handle reissuing CD's during the CD term epescially when the ownership changes.
Posted By: BrendaC

Re: Reissuing CD's during the CD Term - 08/10/11 05:30 PM

You don't technically "re-issue" a CD. You either maintenance an existing CD or close and open new CD.

You're very generous in your policy to waive penalties. In my world, if you want to "change" your existing CD you either wait until maturity or you close it, pay the penalty and establish the new CD. (Except for death or disability, evidenced by court order or receipt of disability payments.)
Posted By: amberleigh

Re: Reissuing CD's during the CD Term - 08/17/11 09:54 PM

Do most banks require the customer to close and reopen a CD if they want to do an early withdrawal on a portion of their CD? If we don't require them to close and reopen the face amount of the CD would be incorrect....but I wasn't sure how most banks handle this. Thanks!
Posted By: BrendaC

Re: Reissuing CD's during the CD Term - 08/18/11 01:38 PM

We haven't required that the entire CD be redeemed in decades. You may withdraw whatever you wish.

We have used book entry CDs since the 80's. Back in the day when we had "real" CDs, we required the customer to bring it in and the face amount was lined through, re-entered in pen and initialled by customer and bank. Way too burdensome in today's automated world. Book entry is the way to go.