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Indemnity Bond For Lost Interest Check??

paoli2
  |     |   2,641 posts since 2011

We have several CDs with a bank not in our city and the only way to get one's monthly interest is to have it mailed to us.  I noticed one of the interest checks did not arrive this month with others in seperate envelopes.   I called the bank and first was told it had had enough time to arrive so they would do a "stop payment" on it and reissue another check.  However I just got a call from another agent who mainly handles CDs and was told their policy is that they have to mail me an Indemnity Bond which I have to get notorized and return to them before they can reissue another check.

I told her this seems ridiculous for such a small amount of the check and if I had to do that, I was not doing further business with their bank when the CDs matured.  She said their President is the only one who can waive my doing the Indemity Bond but she will contact him and see if he will waive it.

  I have never had a bank or credit union in over 50 years of having checks mailed to us, do anything but put a Stop Payment on the missing check and reissuing another.  Has anyone else been told they need the Bond to get a missing check replaced?  I am wondering if all banks are getting stricter with their policies now for some reason.  I never thought to ask them about this when getting a CD before.  Thanks for any info you can share.

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Answers
Shorebreak
  |     |   4,039 posts since 2010
That is why I'm glad I quit having interest checks mailed to me years ago. I was always dreading a check getting lost in the mail. For each of my certificates, that I take the interest or dividends out, the earnings are swept monthly into a checking account or money market account at that institution. I either write a check and cash it at my local brick and mortar bank or use a check card at a surcharge-free CO-OP ATM, if I need cash.
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me1004
  |     |   1,379 posts since 2010
I haven't had banks mail me a check, so I can't tell you anything about that. 

However, another option for you to have the interest paid out to you would be to open a checking account at that bank and have the interest transferred to that and write your own check. Or, instead open a savings account and link it with an account at another bank where you might want the money and use the ACH to bring it over. If you can't get a free checking account, with free checks, then try the savings account route. Many banks and credit unions will allow you to initiate an ACH transfer for free -- whether you initiate it on the CD bank side or on the receiving bank side.

Doing it that way would not only avoid any more checks lost in the mail, it also would get you your money faster as you can write and depost your own check same day rather than wait on the mail, and the ACH could have the money in your account in two days, at least as fast and maybe faster than the mailed check.
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paoli2
  |     |   2,641 posts since 2011
Thanks for the additional info Me1004.  The Bank just called and said the President waived my having to do the Bond.  They will just do the Stop Payment and reissue another check. I asked the agent basically about their doing the ACH transfers each month since 6 checks are involved and another can always get lost in the mail.  She is going to check with that department and let me know if I can have other options such as you posted.  Much appreciation for the info.
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ChrisCD
  |     |   134 posts since 2010
Just so you know we have dealt with this a few times, but for institutional clients.  We have never had to have it notorized though and were always able to have it signed and faxed over to get the stop payment/re-issue process going.

I'm glad they waived the requirement for you.  Good job asking and pushing. 
cd :O)
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paoli2
  |     |   2,641 posts since 2011
I have been doing this so long "the old fashion way with mailed checks" that I need to bite the bullet and try it one of the newer ways.  Is it really that simple to just have the interest swept monthly into a checking or mm account and just write myself the checks?  Why couldn't there be a way I can transfer it from one of those accounts into my local Chase?  Is that possible?

The bank lady at the one where they had to put a stop payment on the missing check today said she is going to look into any other ways we can get the interest each month without having to use the mail.  Maybe she will come up with one of these ways mentioned here.  Would you believe that blasted check arrived in this afternoon's mail!  I called the bank but they said they already put the Stop/Pay on it so I have to return it to them and I can cash the replaced check they are sending me for the interest.  I just can't depend upon my mail here so I have to find another way to get this interest.  One would think in this day and age, ALL the banks would just be able to transfer the interest to my local Chase account instead of having to use the mail.  I see the Chase teller more than I see my family every week!
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Shorebreak
  |     |   4,039 posts since 2010
"Is it really that simple to just have the interest swept monthly into a checking or mm account and just write myself the checks?  Why couldn't there be a way I can transfer it from one of those accounts into my local Chase?  Is that possible?"

Yes it is very simple to do a sweep into an account at the bank or credit union. As for having interest or dividends transferred into your local Chase account I believe it depends on the financial institution. Some will do it and some won't. Years ago I had some municipal bond mutual funds with a fund company that would automatically transfer the interest to my local bank checking account. I have never tried a bank to bank routine transfer of CD interest other than doing a directed ACH transfer online, if allowed, by the bank.
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paoli2
  |     |   2,641 posts since 2011
Wow! I feel like I finally joined the 20th Century!  I just called Navy FCU and the gal set me up with a free checking account, gave me the number and got my local Chase checking info and says now I am good to go.  At the end of month, after interest from all CDs are put into new checking account, I can call them and ask for an ACH (free) transfer to my local Chase checking and bingo, the funds will be in the Chase account within about two days.  Thank you so much for bringing this to my attention.  I am not slow.  It just took me 50 years to decide to do this while the rest of you guys and gals were zooming by all my lost checks in the mail. :)

But Penfed was not that easy.  They do it differently and he gave me all sorts of instructions which I wrote down.  I pulled the "scared, stupid, old lady hoopla" on him and he said when I was ready, I could just call them while at the computer and they would walk me through the directions.  I told him the song "These boots were made for walking" was written for me cause I would need lots of "walking with those directions". Much appreciation for the help and getting me on the right train for my finances. 
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paoli2
  |     |   2,641 posts since 2011
I was wondering if anyone can share if they found an easy way to get their monthly CD interest checks  from Penfed other than by mail.  The procedure given to me over the phone seems a bit more complicated than what Navy FCU has.  Has anyone used it and had any problems with it?  Thanks for any info.
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klink
  |     |   202 posts since 2012
I can not address the issue of interest checks from CD's to me as all mine has been re-invested in the CD and closed at maturity. I can say that in all cases the small print allowed me to open another account which said interest could be deposited and I could later do with whatever. In the case of Pen Fed that would mean opening another account (checking) to be able to actually get my money via a personal check or link my membership account to an external (if possible) and transfer. I remembered from DA that accounts may or may not accrue inactivity fees and so I did not go that route. To many accounts that don't get used enough for me.
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Braden
  |     |   129 posts since 2014
If you ladder smaller CD's to come due monthly or every other month etc you would still have interest checks monthly or every other month.  
You would still have money for income if needed and you would be getting a higher return on your money getting the full APY. You could take out what is needed and reinvest and add to the CD if not needed.  Getting monthly checks cuts into your APY. You are getting less than the APY quoted.
Same with withdrawals on IRA's. Take it out as late in the year as possible. Compounding really makes a HUGE difference. By taking out a few thousand in RMD's  every Jan instead of leaving it until Dec your are continually not getting the interest earned on that money for 11 to 11 1/2  months allowing you a larger RMD the following year.  Imagine taking out a RMD in Jan instead of Dec for 20-30 years how much money you are throwing away.  Why work so hard to save and then defeat your plan? If your CD comes due in Jan, take your interest in Jan getting the full APY. If it comes due in March take the check in March again maximizing your return. Make your money work for you. 
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