I previously wrote about Fort Knox FCU asserting that it can change the early withdrawal penalty applying to a CD at any time. This, of course, raises very serious questions about the idea of getting into a longterm CD with a short early withdrawal penalty, calculating that you can get more interest that way even if closing early and taking the penalty. If Fort Knox can do this legally, then so can all other financial institutions!
Since I posted, I further queried Fort Knox about this. I have my query and Fort Knox's reply below. I note, in summation, Fort Knox specifically states that it can change the early withdrawal penalty on a CD AFTER
the CD is already opened and you are locked into the term! It says it merely needs to give 30 days notice, during which time you can choose to close the CD at the previous early withdrawal penalty (whether that is to your advantage at that particular time or not). So, it is asserting the saver's worst fears.
My previous post was at: http://www.depositaccounts.com/fo...losure.htm
Here is my query to Fort Knox and their reply today:
On 10/25/2010 08:18 AM, we wrote:
We can change the early penalty at any time. If you have a CD with us at the time of the change we have to give you a 30 day notice which would give you a chance to with drawn at the currect withdrawal penality.
On 10/22/2010 11:02 AM, you wrote:
Thank you for your response, especially adding in the second part. I must query, though. You say that AFTER I open a CD and establish that CONTRACT, you can change it at will to change the early withdrawal penalty?!
Please confirm. I guess I can't start asking for an entire legal basis for this, but I will say, as far as I know, once a contract is entered into, you can't change it (unless both parties agree, of course)! Are you REALLY saying that after I enter into a CD, you could change the amount of early withdrawal penalty that applies to it? Or, maybe you were saying that you could change it any time prior to me entering into it? Or??? I REALLY don't think you can do that legally once the contract is entered into.