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Problems Closing a CD at SECU


Banks often don't make it easy to close a CD at maturity. They hope you'll let the CD automatically roll over. If you want to close the CD when the CD matures, you sometimes have to jump through hoops. This problem isn’t just confined to banks. Credit unions can also have issues. That’s the case a DA reader experienced with State Employees Credit Union of Maryland (SECU). He emailed me the issues he had when he tried to have his CD closed at maturity. It reminded me of the issue a reader had when she tried to close a CD at Discover Bank in 2011. Customer service representatives often make mistakes when you give them CD closure instructions. These mistakes can cost you money and require a lot of work to correct. Below are excerpts of the DA reader’s emails in which he described the CD problems he had with SECU:

It's almost embarrassing how mundane this situation is, but it shows what a time, energy, and money suck it can become when a financial institution neglects the basic blocking and tackling of customer service. The story boils down to simple compounded ineptitude in following simple instructions for closing a CD at maturity:

My wife and I each have 5-year CDs at SECU maturing on March 11 and 13. Since SECU's primitive online account access provides no capability to set or display CD maturity options (as so many others do, such as PenFed), I called on Feb. 25 to request that the CDs be closed at maturity and the balances transferred to share savings or checking accounts. After at least a 20-minute wait, I was connected to a CSR who didn't seem to know what he was doing. That should have immediately raised a red flag, but I went ahead anyway with the requests. He kept going away for a minute or so at a time as if he was consulting with someone else and then apparently completed the transaction. Since I wasn't very confident in his ability, I specifically asked him to reiterate that we had requested that the CDs be closed AT MATURITY and the balances transferred as instructed. The total time on the phone for this totally trivial and routine request was roughly 40 minutes.

A couple of days later, I logged into my account and was astonished to see that the CDs had been prematurely closed with interest credited as of the 25th, thus cheating us out of over 2 weeks of interest at 4%. If these had been minimal balances, I might have considered the lost interest to be the cost of doing business with these bozos (at least there was apparently no early withdrawal penalty to add insult to injury), but these are 6-figure balances, so the interest was several hundred dollars. After another 20+ minute wait on hold, I reached another CSR, [name removed], who promised to reverse the bogus transactions and call me to confirm that it had been done within 2 business days, which would be no later than Tuesday, March 4. Total time wasted on the phone was now about 90 minutes.

As luck would have it, Monday was a snow day in the region, so I allowed one more day for something to be done, but heard nothing from [name removed] by Wednesday, so I called yet again. After a third 20+ minute wait on hold, I reached another CSR, [name removed], explained that nothing had been done and asked for a supervisor. Although I didn't get to speak to the supervisor, she assured me that she had discussed it with someone, it would get fixed, and she would call me back within an hour. Naturally, I heard nothing further until she called me near the end of the day to say they were still working on it and she would call me within a day to confirm the result. Of course there was no return call, so I logged into my account and determined that the CD withdrawal had been reversed and credited back to the account as of March 6.

At this point, we're now down to a best-case scenario of 8 days of lost interest, assuming they don't find any more creative ways to screw up the maturity processing. With these balances, it's still a couple of hundred dollars, however.

Here's the latest update:

Exactly as predicted, they credited interest at maturity last night on the first CD, minus the time the balance was out of the account, thus owing over $100 in lost interest. It also shows the CD being rolled over to 2019. Based on past experience, this is how they handle cash outs at maturity. Also based on past experience, however, they can also lose the request to cash out and I then have to go to the branch to get them to fix it.

I’ll update this post once the DA reader reports that SECU has corrected the problem. Both banks and credit unions should have a well defined and easy process to close CDs. Unfortunately, that’s often not the case, and if you don’t get a well-trained CSR, mistakes can happen, and those mistakes can be difficult to correct.

The first general tip for any bank is to make sure you follow up with customer service especially if you don't have anything in writing. When you do speak with a customer service representative, try to record the name of the rep and the date and time of the call. Ask for a letter or email confirmation of your instructions. If you don't receive the written confirmation, make sure you follow up with another call. If you don’t follow up, your CD may not be closed which could cause it to be automatically renewed into a new CD. If you don’t notice this until after the grace period, you may have to pay an early withdrawal penalty to get your money. As this SECU case shows, the CSR may close the CD incorrectly before maturity which can cost you in lost interest or an early withdrawal penalty.

The second general tip for any bank or credit union is to be very careful about specifying when your CD is to be closed. In this SECU case and for the 2011 Discover Bank case, I don't know how customer service could have assumed the customer wanted to close the CD early when it was going to mature in just a few weeks. You can't assume the CSR will act with common sense. The reader who had the Discover Bank issue provided the following tip for others when they instruct their bank to close a CD:

for any and all correspondence to include directions that specify "upon maturity" in bold lettering, and to not be reluctant to repeat the instructions, when closing a CD.

Hopefully, SECU will improve their procedures to ensure this problem doesn't happen again. Also, I hope they make it easier for members to close CDs.

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me1004   |     |   Comment #1
Re the lost days of interest, I recommend the depositor go up the ranks and demand that that be credited. They do owe it, and people up the ranks can give it to you. The easiest way for them to do it is to calculate what is owed and just give you that money, rather than go mess around with the CD. I have had banks do this for me in the past after some ****up of theirs. If they won't cooperate about it, then you should file a compliant with the appropriate CU regulator -- that's easy enough to do online.

As for the account being marked as automatically rolled over to a new term, that is typical. But you should have a certain number of days of grace period in which you can close it -- if they manage to be competent enough  to do so. Of course, you might suffer lost interest again, for the lost days that you did not have the money to do something more gainful with it, so demand that lost money too. 
Anonymous   |     |   Comment #12
I am having difficulties resolving an issue with my credit union. You noted that you could file an on-line complaint with the appropriate CU regulator. Could you tell me how to do that? thanks! 
Anonymous   |     |   Comment #2
Another problem with maturing CD's is that the bank or credit union is slow to mail you the check in the mail.  Once it is mailed, you wait another 7 to 10 days before you get the check in the mail.  During that time, you are wondering if it might be lost in the mail or if they really mailed the check when they said they did.  Then when you deposit the check, the bank or credit union puts about an 8 day hold until the funds are available. 

Below is the solution to this problem:

Pay the $25 wire fee and have your funds wired immediately.  At 3% rate, the funds from a matured cd for the amount of $20,000 would lose apx. $30 of interest in 18 waiting days on funds that are mailed.  So have your funds wired and you will be money ahead and eliminate all the problems mentioned above when you have your check mailed from your matured cd. 
I hate Fort Knox FCU
I hate Fort Knox FCU   |     |   Comment #3
Here is the letter that I have used for over 35 years. I always call about 1 week before maturity to ask if they received my letter and everything is in order.  Then i call a third time on maturity date to be sure they are doing as I instructed.  Still, I have have had problems like the above person!

my name ( both if joint)

todays date (I use maturity date here even if I send this letter much earlier!)

name bank
my account #
Upon maturity on (date),

please close this account and transfer the full balance, including interest, to my  Account # (if at same bank) or wire out instructions.


Call me at above phone number if you have any questions.


Thank you in advance,
pinkterror   |     |   Comment #4
fwiw, i found it easiest to close an account at SECU via fax.  they need your account and then home address.  i do have to admit, i still have a checking account with them today.  (i usually close any accounts and transfer the balance to the checking)
Loki   |     |   Comment #5
It's expensive to hire people, so banks hired stupid ones for minimum wage or just skip the training program altogether.
Anonymous   |     |   Comment #11
This problem is not just limited to banks.
Cracker   |     |   Comment #6
What's up with calling in before the CD matures?  You call in on the date of maturity, period.  No exceptions.  On the maturity date you tell them you want the account closed and how you would like the proceeds sent to you.  If they require it in writing (check with them a week prior), then send a fax that day or mail a letter 3 business days before maturity.  It's not that complicated.
Anonymous   |     |   Comment #7
I had similar run around with incredible bank last year. They short changed me for over $300 on $75K balance and never paid it back after endless hours of talk. Their excuse was: you should have mailed us certified letter not regular mail. The mail was sent 10 days prior to maturity and they received it 3 days before the grace period but never acted on it until I call them to find the status.
QED   |     |   Comment #8
Thank you for your heads up.  OK . . so now we know why they're called "Incredible" Bank.  Their operational competence defies credulity.
hojo   |     |   Comment #9
Incredible bank is a small bank They are way over their heads. Keep aeay
JJ McClellan
JJ McClellan   |     |   Comment #10
Word of advice... As being a bank employee, Customer Service Manager for over 5 years at 2 different banks, the systems are not set up to accommodate FUTURE transactions. At both banks I worked/work for, there is no way for anyone to code in the system to close an account at a specified date. The transaction must be started and finished at the time the account is to be closed. Call the bank a week or so before maturity, inquire about how they need a request for closeout, email, letter, fax, phone call and then submit that request at the day of  maturity. Besides, most banks have a 10 day grace period for renegotiations/closeouts. So if you send a letter the day of or a day or so before your maturity date, you will be fine. Hope this helps!

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