US Bank is hitting its IRA customers with a higher annual fee, and it's making it harder to avoid. Several readers have reported receiving a letter from US Bank informing them of higher fees on their IRA CDs. In summary, the annual fee is going up from $10 to $30, and the minimum IRA balance to have this fee waived is going up from $5,000 to $25,000. This takes effect in July on both existing and new accounts including those with IRA CDs. I just confirmed this with a call to a US Bank IRA specialist.
As readers have mentioned, this fee increase is very unfair for IRA customers with CDs. Many US Bank IRA customers won't be able to increase their balance to $25,000 due to the IRA contribution limits. Those with IRA CDs with balances under $25K will either have to pay the fee or do an early withdrawal and get hit with US Bank's hefty early withdrawal penalty.
I was told by the US Bank IRA specialist that a customer could open a new CD under their IRA account, and if the existing IRA CD and the new IRA CD combine to equal at least $25K, the fee would be waived. This assumes the added money is under the IRA contribution limits or is money transferred from an IRA at another institution.
If you're looking for banks to hold your IRA, avoid those which have annual fees. As US Bank has shown, they can raise their fees and make it very hard to have the fees waived. Fortunately, many banks and most credit unions don't have IRA annual fees. To compare IRA CD rates, please refer to our IRA CD rates tables.
This new fee brings up an important question regarding CDs. What changes can a bank make to existing CDs? As a reader described, this fee change at US Bank is a lot like raising an early withdrawal penalty on an existing CD. Many of us have assumed a CD is like a contract in which the rate, maturity date, early withdrawal penalty and other terms will apply until maturity. If banks can break these contracts on their own, CD account holders will be at risk of more abuse. I discussed this issue many times especially after Fort Knox FCU increased its early withdrawal penalties on existing CDs.
US Bank is a national bank regulated by the OCC. You can file a complaint at the OCC's website, helpwithmybank.gov.