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INTER NATIONAL BANK CD Changes (Change In EWP, Change In Interst Compunding)

Sunday, August 4, 2013 - 1:40 AMInter National Bank - Details
APPLICABLE IN ALL STATES (though the bank is in Texas, they allow CDs from anyone in any state as long as you come to a branch in person -- at least that's what their policy was as of a couple years ago).

Inter National Bank (of Texas) -- famous here on Deposit Accounts, for their "3.25% 5yr ADD-ON CDs with only a 90-day EWP" they were offering a few years back to anyone, as long as they came into a branch -- has just announced CHANGES to their CDs.

I received a form letter today that states:

"Please be advised that effective September 3, 2013 the terms and conditions affecting your Certificate of Deposit will change. These changes will affect your CD upon the next renewal term."

"Frequency of Interest Paid to CD will change from Monthly to Quarterly..."

"Penalties for early withdrawls and early closures have changed as detailed below:

* Long-term CD penalties (maturities of longer than one year) will change from 90 days interest to 2% of the withdrawl or closing balance plus $50.00

* Short-term CD penalties (maturities of one year or less) will change from 30 days interest to 1% of the withdrawal or closing balance plus $25.00

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This is a pretty steep change. Hopefully it appears from this letter that these harsher penalties will only come into effect once your CURRENT term is up (upon renewal), I guess for all new renewals starting Sept 3, 2013 (the letter states "These changes will affect your CD upon the next renewal"). So at least they're not trying to change it mid-stream (hopefully not) during current terms.

Before, there was no stated penalty for closing a CD other than the 90-day EWP (just language that it's up to the bank whether to let you close it or not), and they've added a $50 penalty for closing long term CDs. Right now, interest is paid monthly, they're changing that to quarterly (meaning you don't earn quite as much). But the most severe, harshest change, is changing the current early withdrawl penalty -- besides adding the $50 fee, they're changing it from the current "90 day's worth of interest" to "2% of the withdrawal or closing balance" (+$50). That's a WHOPPING big difference, especially if you have a large amount. Say you have $250,000. The old penalty to close the account early would have been 90 days interest ($2,006 at the current 3.2026 rate). If the same rate were to be available with the new rules, the penalty would jump to 2% of your entire closing balance ($5000) +$50.

So Inter National Bank is getting stricter.

*** THIS MAKES IT EVEN MORE IMPORTANT TO NOTATE WHEN YOUR CD IS ABOUT TO MATURE, AND BE SURE AND CLOSE IT OUT DURING THE ALLOTED GRACE PERIOD. IF YOU FORGET AND IT AUTO-RENEWS, YOU'LL THEN BE IN FOR A VERY LARGE PENALTY IF FORGET, AND WANT TO GET THE MONEY OUT AND NOT HAVE IT BE LOCKED IN FOR ANOTHER 5 YEARS AT A (now) MUCH LOWER RATE ***

NOTE: this follows a SIMILAR LETTER sent a few months back, stating that another change to these CDs was that they would NO LONGER HAVE THE ADD-ON FEATURE (starting with the renewal term, not changing them midstream). So as well as making these changes, Inter National Bank has dropped the Add-On feature for their CDs.

A lot of you who have the CD specials probably have about 2 years of life left in them (out of the 5 years), but I'm assuming that this post applies to all CDs that the bank offers (I only used the nice add-on special CDs since that's what they were famous for here at deposit accounts).
5
inbcdguyinbcdguy2 posts since
Aug 4, 2013
Rep Points: 8
1. Sunday, August 4, 2013 - 1:58 PM
inbcdguy, I remember this CD special; unfortunately, I didn't take advantage of it. I noted that you said the bank has language in its existing CD agreements which gives it the option to prohibit early withdrawals. Is this true? Also, does the change to quarterly interest payments apply to existing CDs? BTW, what are their current CD rates?
2
loulou544 posts since
Aug 3, 2010
Rep Points: 3,397
2. Monday, August 5, 2013 - 2:46 AM
INB is NOT changing mid-stream. Those with current CDs will have the same terms until their current CD matures. At that point (at renewal), the terms will then change. So those with current CDs will still have the ability to Add-On, have just the 90-day-interest EWP, and the monthly compounding. It's just when the current batch of CDs mature, if you choose to renew it, the new CD will have these harsher terms.

As far as the CURRENT CDs, there is language in the contract saying something like if you want, you can close the CD early if agreed to by the bank (I don't have the exact language handy). So under the old/current terms, the bank would have to agree to let you close your CD early (but with them having to pay 3.25% for an add-on CD, I would think they would be happy to let their customers close those CDs out).

Their current terms are nothing special. No more add-on CDs, and rates are as low as everywhere else. I don't have them handy (and they're not posted online) but I asked a month or two ago, and the rates were no better than anywhere else's.
3
inbcdguyinbcdguy2 posts since
Aug 4, 2013
Rep Points: 8
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