About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Another Credit Union Increases Early Withdrawal Penalty on Existing CDs


A reader recently informed me that his credit union, CEFCU, sent out letters with a change-in-terms notice informing members that certificate early withdrawal penalties would increase effective March 15, 2012. He learned that this change would apply to existing certificates. Thus, the early withdrawal penalty on his CEFCU 5-year CD would increase from 180 days of dividends to 365 days of dividends on March 15th. I've confirmed this with the credit union which emailed me its change-of-notice document.

The reader has complained to the credit union and has spoken with management. After some discussion, a manager agreed to let him close the account within a week, with no early withdrawal penalty. The problem with that option is that he'll lose his high interest rate that would otherwise remain in effect for several more years.

If you're a CEFCU member with a CD, you'll have to speak up if you want the option to close the CD without a penalty before this change takes effect. For members who can't get this special exception, the only option will be to close their CDs before March 15th with the existing early withdrawal penalties. Here's an excerpt from the email reply I received from CEFCU management:

The Change In Terms Notice does apply to existing Certificates, but not until March 15th, 2012. So current Certificates could be closed at the current penalties until then. To address your point on changing the early withdrawal penalties, be advised that any financial institution can do the same with a 30 advance notice. Therefore it would be prudent select a term and rate that you are comfortable keeping for the duration.

In my opinion, CEFCU management is being too confident in thinking that "any financial institution can do the same with a 30 day advance notice". I asked my NCUA contact about this, and he sent an "Official Staff Interpretation" of a NCUA regulation which stated:

Credit unions are cautioned that unless credit unions have reserved the right to change terms in the account agreement or disclosures, a change-in-terms notice may not be sufficient to amend the terms under applicable law.

So if the institution doesn't have anything in their disclosures which gives them the right to change terms, they might be violating a regulation. However, it should be noted that a generic clause allowing the institution to make account changes is probably common in member agreements or disclosures.

Early Withdrawal Penalty Increases at Fort Knox FCU

Last year Fort Knox Federal Credit Union made a similar change to its certificates and applied the larger early withdrawal penalties to existing certificates. A reader who was a member at Fort Knox FCU filed a complaint with its regulator, the NCUA. Unfortunately, the NCUA ruled in favor of Fort Knox FCU claiming that the change was in accordance with the terms of the membership agreement which had a generic and broad allowance for the credit union to make any change to accounts.

Fairness to CD Account Holders?

In my opinion, it's unfair to overturn an important term (the early withdrawal penalty) that's explicitly specified in the membership agreement based on generic clauses. As one reader stated in the comments, this makes the CD "contract" a completely one-way street, with protections for the institution and in effect none for the account holder.

It's interesting to see credit unions being the institutions that have retroactively applied early withdrawal penalty increases to existing CDs. When Bank of America increased its early withdrawal penalty last year, it didn't apply the change to existing CDs. It only affected new CDs or CDs that were renewed. This is the fair way to increase a CD early withdrawal penalty.

Not all credit unions have applied early withdrawal penalty changes to existing certificates. One example is Pentagon Federal Credit Union. Last year it increased the early withdrawal penalty for its 5-year certificates, but it applied this change only to new certificates.

The general opinions from people in the industry is that early withdrawal penalty changes should not apply to existing CDs. Last year I submitted this question to Ask a Banker website. Here's an excerpt from their reply:

Increasing the penalty for closing a CD early is not a normal change. Call the bank and ask to speak to a bank officer about this. They shouldn't be able to do it any more than you could tell them you have reduced the penalty to 45 days. Again, an allowance to modify the CD contract unilaterally would be very unusual.

This general opinion is not much help for a specific case, but it does show that increasing the penalty on existing CDs is not considered fair.

Filing a Complaint Against a Credit Union

It may not have helped in the Fort Knox FCU case, but it doesn't hurt to file complaint in this case. That is what the reader plans to do, and I'll keep you updated on how it goes. One difference between these two cases is that CEFCU is not a federal credit union. The credit union's full name is Citizens Equity First Credit Union. The "F" in CEFCU is short for "First" and not "Federal". CEFCU is a state-chartered credit union that's based in Illinois. This NCUA page has more details about determining if your credit union is a state-chartered credit union.

If your credit union is a state-chartered credit union, complaints will generally have to be submitted to a state supervisory authority. The NCUA lists the contact information of all of the states in this webpage. The Illinois Department of Financial & Professional Regulation oversees Illinois state-chartered credit unions, and its complaint form is located at this webpage. At the top of the complaint form, the Illinois agency warns that it can only provide assistance if the issue involves a violation of a regulation.

Hopefully, this Illinois agency will be more pro-consumer than the NCUA was.

Future Concerns

This case with CEFCU is another example showing the risk of depending on mild early withdrawal penalties on long-term CDs. There's a concern of what will happen when interest rates start rising. If rates shoot up, that could put pressure on banks and credit unions to increase the early withdrawal penalties. More institutions may choose to try to increase the penalties on existing CDs.

It should be noted that regulations do require institutions to provide at least 30 days written notice before the changes are made. Before that change, a CD holder can make an early withdrawal with the existing penalty. If the institution is making this change due to interest rates shooting up, it may be an easy decision for the CD holder to close the CD with the existing penalty so he or she can reinvest the money into a new CD with a higher rate.

It's a more difficult decision if the institution is increasing the penalty in today's environment when no one knows how long rates will stay low. If the CD holder closes the CD now with the existing penalty, he or she will only be able to reinvest the money into a lower-yielding account.

The main risk for CD holders is if the institution can refuse an early withdrawal request. That completely locks a customer into a CD until maturity. Some institutions do include in their disclosures the right to refuse an early withdrawal request.

Bottom Line

In my opinion, these actions of CEFCU and Fort Knox FCU are unfair to the members who purchased the certificates with the reasonable expectation that the rates, maturity dates and the early withdrawal penalties were locked until maturity. This might be the time to get help from the new Consumer Financial Protection Bureau (CFPB). Here's an excerpt from CFPB's website which describes the bureau's mission:

Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families—that prices are clear up front, that risks are visible, and that nothing is buried in fine print.

If an institution wants to meet the spirit of this, they should avoid increasing the early withdrawal penalties on existing CDs or they should state in their disclosures in the sections on the early withdrawal penalties that the penalties may be increased before the CD matures. In my opinion, justifying a penalty change based on some generic clause buried in the disclosure doesn't meet the fairness criteria as promoted by the CFPB.

Related Pages: CD rates

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  |     |   Comment #1
Retroactivity that is negative to a contracted term account should not be allowed under any circumstance. Such simply is wrong and undermines the reasons to enter the contract in the first place. The issue isn't even satisfied by letting you close the CD early without penalty -- as your option now to get something else might be far worse than if you had made a different choice in the first place, leaving you at a lose. 

Nonetheless, when there is a clause anywhere in the miles and miles of materials controlling the CD, even a vague and generic overriding clause in a CU membership agreement rather than directly in the CD contract itself that provides for such, then they can, and we now know will, do it. 

This is unfortunate; this is a travesty. But until laws are changed to bar this practice, savers better beware when taking out a longterm CD with the idea they will close it early and come out ahead despite the EWP in place when they started the CD. 

I have yet to see any bank or CU that does not have some such clause somewhere -- although of course, I have not read all the material for all the banks and CUs. But I suspect they all, or at least nearly all, have such. And I will warn, it is not necessarily noticeable to the average reader -- it can take at least some small level of familiarity with legal documents (I am not a lawyer, but I have read LOTS of legal documents and appellate cases) to realize what it is saying and how far it reaches. As such, I advise to just presume they can all do it -- unless and until you are sure to a legal certainty otherwise.

And again, these CUs have done it now, under current circumstances, which are not circumstances that are pushing it. When interest rates start rising, and CD holders start seeing benefits to closing their longterm CDs and getting new ones at higher rates, that will create tremendous pressure on the banks and CUs to stop the mass outflow, and you better realize they will do whatever it takes to protect their bottom line. You better expect much more, probably a lot of retroactive changes in EWPs when that happens. 

This approach of taking the longterm CDs with the idea of closing them when rates rise has been going on for at least a couple years now. As it turns out, the early takers have lucked out, as rates have remained horrendously low far, far longer than had been expected. But that was just sheer luck, not anything that could reasonably have been expected. The Fed now says no rise until AT LEAST mid-2013. Beware, the ride of luck of the early takers might very well be over, if rates actually do start rising in another year and a half. Two years from now, you might wish you were not locked into that longterm CD, and might be very unhappy that your EWP has been changed significantly enough to make it a losing proposition to close it. 

Or, another clause allowing the bank or CU simply to bar an early closure might be exercised.
  |     |   Comment #2
What I hate about all this is that the banks and credit unions act like the CDs are not really "contracts" and make light of the disclosures "until" they want to smack us in the face with something.  My cu still has not sent me a copy of their Disclosure and act like I am making such a big deal because I want to read it!

I think they all know how desperately we are searching for "any" rate which we can survive with and if they give us such a rate, we make sure through their "contracts"(?) they can turn the **** on us even tighter if we dare try to get the money back early.  I don't put money in CDs with the thought of hoping to get it back early but one never knows when an emergency or problem will occur and we may need the funds.  I certainly don't think, from everything I have read, and am hearing, that we will be racing to cash in CDs for those great higher rates in the future!  It's like once a product at the grocery has it's price raised, we never see it again at the lower price unless we catch a sale.

No Sale on CDs that I know about!  So I fear these low rates are here to stay and we all need to find a way to adjust to them or find other "safe" investments.

  |     |   Comment #3
I am within CEFCU's field of membership, and have been considering joining for the past couple of years, but this report leaves a bad taste in my mouth.  Not only that, one has to wonder what the MOTIVATION behind the change in terms is.  CEFCU has had miserable CD rates now for the past two years, far below not only big credit unions like PenFed, but also behind some small local banks as well.  One can only wonder what's going on!
  |     |   Comment #4
Frankly when I purchase a CD (and I have 33 of them currently) I never even look at the withdrawal penalties since I virtually never withdraw early. Additionally I use a HELOC (at 2.75% Interest Only) as a backup to any funds that may be needed. Also Pentagon Federal CU allows for a CD Loan up to 90% of the value of the CD (although it is 2% above the rate on the respective CD) and the loan never has to be repaid until the respective CD matures. I would not bet much money on getting Banks or Credit Unions to reverse any changes on withdrawal penalties and suggest people plan accordingly. Just my $.02.
  |     |   Comment #5
They give you a super low interest rate and then stick it in your face with this kind of betrayal.

Remember the good old days when banks would actually pay you something for your money,not anymore thanks to the FED. 

Wow special rate 2.5% 5 year CD, I don't think I can contain my joy.
  |     |   Comment #6

And you're lucky to get the 2.5% that is the sad part.
  |     |   Comment #7
Retroactive changes in CD terms is unreasonable, regardless of a fine print disclosure.  In addition to submitting complaints (as previously mentioned) with the NCUA and state regulators, Credit Unions typically have internal supervisory committees and a Board of Directors.  They may not be fully aware of the business decisions that Senior Management is making.  Perhaps complaints to the supervisory committee chairperson and the chairman of the board (in addition to the CEO).  Also, for credit union members that live in the local credit union area, attend the annual meeting and voice your concerns.  Finally, consider notifying local newspapers, TV stations, and social media (Facebook, etc).
  |     |   Comment #8
What a bunch of winers, accept for #4.  If you don't like the terms in the disclosures, don't take the CD.

The credit unions sticking it in your face, not really.  Weren't you planning the same if after taking out a low rate CD if CD rates were to raise, cash it in before maturity to take advantage of the higher rate.  Then who would be sticking it in who's face?

I hate these extremely low rates too, but don't blame the credit unions for trying to protect themselves and maintain financial stability as long as there is full disclosure.  The dicisons is always yours whether to accept or decline the terms and conditions before you take out a CD.
  |     |   Comment #14
#8  You need to wake up and stop spewing this credit union B.S. 

Why advertise one EWP and then raise it retroactively? Seems to me the credit union is the deceitful one.

The credit union offers you an EWP you accept the deal by giving them your money and then they change the EWP and we are the bad ones....

What if the rates went down and somebody needs their money does that person get to lower the EWP?
  |     |   Comment #32
The problem #8 is how can you "accept or decline" the terms when the terms can change to something you where never given the choice of accepting or declining? You can only accept or decline the terms as they were at the time you accepted them as you aren't psychic and can't know what the future changes to those terms will be.

Reminds me of the scene in Empire Strikes Back, with savers in the role of Lando and banks/CU in the role of vader:
Lando: That wasn't part of the deal!
Vader: I'm altering the deal, Pray I don't alter it any further
  |     |   Comment #33
Begs the question on how the FI funds it’s loans, conducts business, etc? Slow or is it “us” in not being creative in getting $ to them...or they don’t want “our” $
  |     |   Comment #9
Anonymous #8

Where did you come up with that BS. You must be a manager at one of these sleazy banks or credit unions.

Agreements are supposed to work 2 ways., not one way. If I need my money and I agree to a 180 day penalty and pay it. I am not taking advantage of the bank or credit union, That is what both parties  agreed on.

I encourage evey one to file  written complaints, which I have already done in this case.
  |     |   Comment #10
Anonymous #8: I actually generally agree with your point. However, what is going on out there is not at all so clear -- the way the disclosures are being handled is certainly not adequate for people to actually be informed -- and if they were informed, it is unlikely they would be taking any CD from any place that can unilaterally change the terms of it at any time. People feel they are being duped and taken as fools -- and frankly, they are.

People are taking out CDs and believing the terms they are presented at opening are actually the terms they will be operating under -- but that is not necessarily so, they are now finding out. These clauses allowing unilateral changes to existing CDs are not obvious, are anything but clear, are often not even in the CD disclosures, but a vague overriding clause that would probably require a lawyer to understand and buried in CU membership agreements, not always in the CD terms. Even in the CD terms, they are not obvious. This clearly is not adequately informing people, no matter any legal standard.

Nonetheless, I don't know of any contracts that allow for unilateral changes in the terms of the contract -- that normally is something that has to be negotiated. As other posters have said, how is it even a binding contract if one side can change it at will anyway they want after you are locked in? You agreed to a certain set of conditions, and then after your money is locked in, they change the conditions. Well, actually, I'm not sure it is a contract, might be merely an agreement. But whatever it is called, people are believing they are entering a binding contract that can't be changed -- but that is not so, they are being duped. They would be making very different decisions if they were adequately informed.
  |     |   Comment #11
Whoa - time out - Some Is Really Wrong With This Picture.  When a person purchases a CD, a bargain is struck.  Both parties receive a benefit.  Whether it's called a contract or not, the deal is a commercial transaction.  There is an expectation of an exchange of benefits - the CU received the purchasers money in exchange for a payment.  The purchaser "rented his money" to the CU for a specific period of time and received compensation according to the terms of the deal. 

If then, the seller (CU) says, after the deal is struck, "oh by the way, I really didn't mean what I told you, I'm going to unilaterially change the terms of our deal" - I would argue that there never was a deal in the first place - and, particularly if the terms of the purchase were so precarious to include some ****eyed statement that the "Credit Union can change any provision of this agreement with an xx number of days notice".  If that's the case there simply could never be a meeting of the minds with that language.  Thus, if this is the language that CU's are using in their disclosure statements, it seems to me that there is an intention to deceive or defraud purchasers of their product.  This isn't a question of "Fairness", this is a question of legality.

Regarding reaching out to NCUA for a ruling on this matter - I think that's the wrong venue.  Performance under a commercial transaction is a legal matter, not a regulatory matter.  The correct place to obtain satisfaction on this issue is in civil court on a fraud charge.  I think all the members of the two Credit Unions mentioned should file a class action lawsuit and pursuue this matter in court.
  |     |   Comment #12
Anon #8:

You must work at one of these banks.  So wrong-headed but STILL believe what you say is morally, legally, and ethically fine.

Look up what contract means.  No one is 'sticking it in the banks face' if they pay the early W/D penalty which both parties had previously agreed to. 

How would you like it if someone bought your car and came back later wanting to pay less/get a refund?  Would you feel that's OK?  Of course not.  The 2 of you had already entered into a contract when the car was sold at the agreed price.

It's ridiculous to have to explain this stuff but does somewhat highlight the current state of public intelligence.

  |     |   Comment #15
#12    #8 is an employee of a credit union otherwise couldn't be that blind.
  |     |   Comment #13
If you get e-statements, the notice was somewhat hidden. The "CEFCU eStatement" email says this: 

Your CEFCU eStatement is now available. To access it, log-in to CEFCU On-Line and click the "Official Statement" link to select and view your current eStatement, or to access past eStatements.

EFFECTIVE MARCH 15, 2012, CEFCU is amending its Rate and Fee Schedules. Please review those changes in the attached "Change In Terms Notice - January 2012".

DISCLAIMER: Also attached is a "Disclosure" covering, "What To Do If You Find A Mistake On Your Statement", "In Case Of Errors or Questions About Your Electronic Transfers", and "Requirements For Payments By Mail".

If you have any questions or need assistance accessing your eStatement, please call the Contact Center during business hours at 1.800.633.7077.

Thank you,
  |     |   Comment #16
Do we think we are dealing with fools when we get CDS from banks and credit unions?  These people hire lawyers to tell them how to SNEAK in just one or two words mixed up in a paragraph which gives them the right to **** us whenever they want to!  I have been dealing with CDs for over 40 years and never had to be concerned about reading the fine print.  If you get bored, just pull out your CDs and find that two letter word "IF" in it.  That "IF" is their free pass to break what we think is a legal contract and what they just consider a receipt for doing us the favor of holding our money!  They know we are in a desperate position at these times so unless we go forward in some kind of a class action suit against them or just bring it up in the news, we have to just sit back and take our lumps!

It seems credit unions are no less brutal than banks when it comes to these EWPs and playing around with interest rates.  Maybe we need to have a "Return to the banks, day!"  We are toast when it comes to CDs and they won't even give us any butter!   When I watched all the Republican debates recently, I waited to see if any one in the audience would bring us this problem about when these low interest rates are doing to savers and especially the elderly.  It never came up one time!  No one seems to care!
  |     |   Comment #17
People, no surprise here, I have CD disclosures since the ‘80s and all of them state that the Bank reserve all rights to change the early withdrawals terms since they have inserted the words “..may allow..”, “..may approve..”, “..may change..”, “may negotiate..” and so on.

The word “MAY”  is in favor of the bank and if they don’t like to approve early withdrawal, penalty or not, you will not get your money early no matter what.

Unless you get a disclosure that explicitly state that you “will be able to withdraw early without bank approval”, otherwise, you are on the terms of the bank and not on your own wish.
  |     |   Comment #19
#17 may be right, but that doesn't mean it's ethical to do that to people. I recommend taking out your money at your earliest convenience and never using this bank again. Hopefully it will fail.
  |     |   Comment #18
To all those who think that a disclosure is a mutual agreement, well, you are wrong.
You don’t have to agree to anything, by opening the CD, you are already agreeing,
the bank’s disclosure to become an agreement and that disclosure protects the bank, not you.

Number 17, got it right.
  |     |   Comment #20
How many banks and credit unions are using these clauses to reduce the interest rates on existing CD's?

Can they both reduce the rates and extend the terms of existing CD's?
  |     |   Comment #21
Folks, I have to say, yet again, you would be crazy to put your money into long term CDs paying the tiny rates that are being offered these days.  Absolutely, crazy!  The only bank accounts you should have are money market and/or totally liquid savings accounts to temporarily house cash while you prepare to buy precious metals on the big price dips.

We are entering an era of heavy financial repression, wherein governments will artificially suppress interest rates, by heavy bond purchases by the Federal Reserve, ECB, Bank of England, etc.  This will be done to help them pay for profligate spending and to induce heavy inflation.  The cost of servicing debt will be permanently reduced in this manner on the backs of innocent savers.  That, combined with capricious actions like changing the withdrawal penalties after-the-contract-is-signed is enough to stop rational people from buying CDs.  If they can change the withdrawal penalty at will, and the government has backed up at least one credit union that did this, what is to stop them from unilaterally changing the term?  Buy a 5 year CD at 2.2%, and the bank decides to change that term to 10 years, if interest rates go to, let's say 15%.   Why not?  What is the difference between changing the withdrawal penalty and changing the term of years?

Essentially, what we have is both taxation without representation, and abuse of savers by banks supported by government bureaucrats who say it is OK to alter material elements of CD contracts after the fact. America is headed for authoritarianism and a lack of honesty in all institutions, unless we choose to vote for big changes and elect Ron Paul. 

Our money is being depreciated with each episode of money printing (QE) such that each pre-exiting note is worth less. one that existed before the quantitative easing (a/k/a money printing) episodes is reduced in terms of what goods and services it can command in the marketplace.  Interest rates will stay very low, even as inflation goes very high, while deceitful  government agencies, charged with the duty to report the consumer price index, falsify reported inflation rates (see www.shadowstats.com). 

For example, under the inflation formula of 1980, the USA would have to report it is experiencing 11.2% inflation per annum.  The government doesn't want to report that, because it indicates total failure on the part of policy makers.  So, the Labor department falsifies the data, while still ostensibly "telling the truth" by changing the formula, adding various statistical gimmicks, and, in the end, reporting that the CPI is only about 3%.

The bottom line is that the economic recovery is being paid for by fixed income investors in CDs  bonds.  There is no likelihood that this situation is going to end any time soon.  Money will be stolen from hard-working folks and given to Wall Street (and High Street, London) speculators. Secondarily, money will be handed out in the form of government programs to non-savers (who are a majority of the western world) to buy votes, just like in ancient Rome. 

So, forget about long term CDs.   Your savings will be wiped out, in real terms, even though you will earn a small nominal interest rate.  As soon as we exit this depression, the inflation rate is going to jump even much higher than the current 11.2%.  Hyperinflation rates of over 100% per annum, after statistical gimmickry is removed, are probable, even as the government lies and tells us, during that time period, that inflation is, perhaps, running at 11%.

People who want to preserve assets through this time of trouble need to save part of their money in metal.  Right now, platinum has lagged the other precious metals, and is a very good buy, because although it is a late reactor, it will eventually respond even better than gold or silver to inflationary pressure.  It could even go down a bit more this week, making it an even better buy.  Gold and silver have already taken off, but are still worth buying.  Buy on the price dips!

I am putting 80% of my wealth in a combination of the three metals, but even a 20% allocation will leave you some valuable assets, at the end of this decade, as compared with no buying power at all, for your CDs.
  |     |   Comment #22
Here are some interesting campaign contribution facts to think about.  According to this article, only 10% of Mitt Romney's contributors are small donors who give less than $200, while 48% of Ron Paul's contributors are small donors.  Mitt Romney has all the too big to fail banks giving 6 figure oodles of cash to him, whereas Ron Paul has no 6 figures contributors at all.  If you thinki banks and credit unions are getting away with stuff now, just imagine what is going to happen after Romney gets elected.  In the coming election, I'll be voting for Ron Paul.  Below, you will find the full contribution numbers from:



Goldman Sachs(GS) $367,200
Credit Suisse Group(CS) $203,750
Morgan Stanley(MS) $199,800
HIG Capital $186,500
Barclays (BCS) $157,750
Kirkland & Ellis $132,100
Bank of America (BAC) $126,500
PriceWaterhouseCoopers $118,250
EMC Corp (EMC) $117,300
JPMorgan Chase (JPM) $112,250
The Villages $97,500
Vivint Inc $80,750
Marriott International (MAR) $79,837
Sullivan & Cromwell $79,250
Bain Capital $74,500
UBS AG (UBS) $73,750
Wells Fargo (WFC) $61,500
Blackstone Group (BX) $59,800
Citigroup Inc (C) $57,050
Bain & Co $52,500


US Army $24,503
US Air Force $23,335
US Navy $17,432
Mason Capital Management $14,000
Microsoft Corp (MSFT) $13,398
Boeing Co  (BA) $10,620
Google Inc  (GOOG) $10,390
Overland Sheepskin $10,350
IBM Corp (IBM) $8,294
US Government $7,756
DUNN Capital Management $7,500
Corriente Advisors $7,500
Greenstreet Co $7,500
Northrop Grumman (NOC) $7,272
Lockheed Martin(LMT) $7,208
Intel Corp (INTC) $6,855
US Dept of Defense $6,524
United Technologies (UTX) $6,316
Federal Express (FDX) $6,255
Entergy Corp (ETR) $5,950
  |     |   Comment #23
It IS CRAZY to buy a CD or a bond in this environment of low rates and government bureaucrats who support unfair behavior on the part of banks and credit unions.  There really is nothing to stop them from changing the term of the CD also, if they can change the penalty. Buying precious metals is the right choice.  Forget about banks and credit unions.
  |     |   Comment #24
To Anonymous - #20,

Yes they can, if the bank is being:

3-In reorganization
4-Under order from FDIC
5-Closed (you may not get your interest)
6-Permission from FTC, FEC, state regulators or other circumstances
  |     |   Comment #25
Yes.  Ron Paul is the only honest candidate.  Mitt Romney is a tool of the banksters.
  |     |   Comment #26
You have the key, ILsaver #3.  What is the credit union's MOTIVATION for this change?

The motivation has to be about profit & loss.

They must be expecting conditions that could cause a run of CD early closures, and/or have a substantial risk for losing use of these existing CD funds before the due dates.

A lot of CD early withdraws would affect their required reserves, quite in excess of the interest penalties they would then keep for themselves. 

Are they expecting a future rate increase of enough points to make it profitable for customers to do an early withdraw?  This is the 'rampant inflation' theory.

Or maybe they WANT to get rid of a lot of CD funds.  Maybe they expect rates to go to zero, or they cannot pay the previously agreed-upon rates, so are hoping to 'encourage' customers to pull their CD funds.

Anonymous #8 - it is NOT 'Full Disclosure' to bury a one-liner in a 40-page legal document.  It is intent to deceive.  There is law that protects consumers against this type of fraud.

RealityCheck #21 definitely has the bigger picture.  The point being that if this credit union's fraud is not reversed by the powers that are supposed to be protecting Americans, you can guarantee it is already too late for a return to ethics and sanity.
  |     |   Comment #27
The key word is "laddering".  I would never do business with any CU or Bank that changed the EWP on existing cd's (fort knox).  It's important to spread the word when an institution does use such tactics.  A good ladderring program will help you weather the problems.  I have never closed a 5year cd, prior to the maturity date, been doing  cd's since the 80's. 
  |     |   Comment #28
Could it be that some Credit Unions may be hiring culprits who've lost their positions with the predatory big banks?  Are these CUs trying to survive, or are their CU CEO's opportunistically enriching themselves by showing that they can "improve" the bottom line?     Would appear, that in these cases, the original purpose of credit unions has been lost, i.e.; that a credit union is a membership organization for the good of the members, not solely for increasing the bottom line and for officer/management paycheck improvement (note: I'm not including tellers et al in this, as we know they are likely left out of the cushy benefits loop.).  

I agree that remedies noted in comments made here should be taken.  Further suggestion: when signing up for a CD, write in clear language what is understood to have been explained by the CU representative as the contract, i.e., the basic rules, and have that signed or at least acknowledged with a reply to the emailed message in a reply email.  If they won't do this, then don't do business with them, and let them know why, and then where you are taking your business.  
  |     |   Comment #29
The cu has a fiduciary duty to its members..changing the terms midstream should be demostrated by the cu "on how this comports" with that strict liability duty!
  |     |   Comment #30
Synchrony Bank updated the Early Withdrawal Penalty. According to the Synchrony Bank Consumer Deposit Account Agreement and Disclosures Effective June 13, 2016:
Withdrawals and Early Withdrawal Penalty – An early withdrawal penalty will be imposed if you withdraw any funds in a CD before the maturity date. The early withdrawal penalty for a CD with a term of 12 months or less will be an amount equal to 90 days simple interest on the amount withdrawn at the current interest rate for the CD. The early withdrawal penalty for a CD with a term of more than 12 months but less than 48 months will be an amount equal to 180 days simple interest on the amount withdrawn at the current interest rate for the CD. The early withdrawal penalty for a CD with a term of 48 months or more will be an amount equal to 365 days simple interest on the amount withdrawn at the current interest rate for the CD. Depending on how early in the term and how much you withdraw, the early withdrawal penalty may be greater than the interest earned on the CD and may result in a reduction of principal. No penalty applies to the withdrawal of interest earned and credited during the current term of the CD.
An early withdrawal without penalty will generally be permitted in the following circumstances:• In the event of death or the adjudication of incompetence of an owner;• Within the Grace Period described below;• For IRA CD account holders, if the early withdrawal is made to satisfy an IRS-required minimum distribution; or• For IRAs established under 26 USC §408 and the money is paid within 7 days of establishment of the IRA (but we will assess a penalty equal to the simple interest earned on the amount withdrawn).
  |     |   Comment #31
American Bank just sent a notice changing the EWP - 5 year goes from 180 to 365 for new or renewal.  

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