CD Interest Paid Monthly Change to Compound

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Question:

If a customer with a 4 year CD with interest paid monthly, after 6 months, decides to have it compound annually, what would be the next date for interest to be paid? The opening date was 1-1-2016.

Answer:

You could do it in January 2017 and annually thereafter or wait a full year (7/1/17) and annually thereafter. Either way, you're going to have a 6 month crediting (either now or later) since they didn't make this change until after 6 months and now want it to be annually. Whatever you work out, spell it out in the modification agreement. You're not required to give new disclosures so it really makes no difference.