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Grand Opening Promotional Savings Account

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Question: 
Our bank is offering a grand opening promotional savings account. As part of the account terms after the initial 6 month promo period the promotional account will convert to a standard savings account. The current promo disclosure states "at the end of the 6 month period the account will convert to a regular savings account". The promo product will pay interest on any balance of $1.00 or more, however, the regular savings products will pay interest on any balance of $500.00 or more. Does the minimum balance to earn interest on the regular savings account need to be disclosed on the promo product disclosure?
Answer: 

I would opine that you would disclose to the consumer in advance what the current account terms are, as well as the terms of the account it will revert to at that six month mark. I base this on the fact that Reg DD is all about informing the consumer about their account. Part of this is to avoid a change in terms notice later. Section 230.5, OSC (a)(1)3 tells us "an institution offering terms that will automatically change upon the occurrence of a stated event need not send an advance notice of the change provided if the institution fully describes the conditions of the change in the account opening disclosures and sends any change-in-term notices regardless of whether the changed term affects that consumer's account at that time."

First published on BankersOnline.com 1/08/07

First published on 01/08/2007

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