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Can Bank/Credit Union change existing CD Rate?

Neotrader
  |     |   2 posts since 2017

I want to buy CDs from InvesTex CU since they're offering good rates. However, the fine print implies that they can change the rate anytime. Does this apply to existing account? Below is the term & condition from InvesTex.

1APY means “Annual Percentage Yield”. APY assumes dividends remain in the account until maturity. Withdrawals reduce earnings. All accounts must remain open through the end of the dividend period or the maturity date to be paid the accrued dividends. The above rates were paid for their respective dividend period. Dividends are paid at the end of the period from the current income and the available earnings after any required transfers to reserves. These rates are not guaranteed for the current dividend period. All deposits are federally insured by NCUA. Rates and APY are subject to change without notice.

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Answers
me1004
  |     |   1,379 posts since 2010
Well, I'm afraid you have pulled that clause out of context, so it is hard to give you an answer based on that. I can't even tell if that clause is specific to their CDs or a general clause for their accounts overall. And I can't even find any CD or other disclosures at their Website.

However, some CDs are set at a variable rate, can go up or down, generally linked to some index. Also, callable CDs can even be closed by the bank/CU at any time, no matter the term you signed up for. So, it is possible the rate could go up or down during the term, but again, I can't tell from what you posted.
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Neotrader
  |     |   2 posts since 2017
Thanks for responding. That's the only description I could find on their site. Their truth in saving document didn't have any information regarding CD. I'll do more research before committing to anything.
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paoli2
  |     |   2,641 posts since 2011
In over 50 years of purchasing CDs from banks, credit unions and brokerages, I have never had one do a rate change during the term of the specific CD that was purchased. I have seen this disclosure on other type accounts. I also have had to call the President of one bank due to a disclosure I was not happy with and when they checked, I was told it was an error and they sent me a signed letter to attach to the CD stating that. By all means, make sure you find out why that clause is on there "before" you buy the CD. If it is on there in error, I would make sure I get a signed letter from them stating it does not apply to my particular CD.
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Bozo
  |     |   1,375 posts since 2011
Paoli2, theoretically, those "weasel words" in the fine print allow the financial institution to alter just about every term of the CD. Rates included.
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paoli2
  |     |   2,641 posts since 2011
Bozo, this is why when I found my "weasel words" inserted into my CD, I contacted the President of the particular bank letting him know I felt it was done purposely and would report them unless he made sure I got a signed letter protecting me until the CD term was up. He was so apologetic and thanked me for reading all the pages of fine print and "helping" them so they could see that the info was removed from "all" CDs it was put in, in error.

Therein lies the problem. They know most people do not take the time to read the fine print on documents. I do! When it comes to finances and the medical profession, I do do my "due" diligence to the utmost degree!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, at least you could find the President of said bank.
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paoli2
  |     |   2,641 posts since 2011
Bozo, well he "said" he was the President but he could have been the kid delivering hot dogs for all I really know. "Someone" made sure I got the requested letter tho and that was all I really cared about.
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Bozo
  |     |   1,375 posts since 2011
Paoli2, too funny. The hot dog guy. When the financial institution changes your rate mid-term, and claims no knowledge of the letter, they can blame it on the hot dog guy.

As I recall, the hot dog guy can be blamed for just about everything, aside from mustard choice. Mustard? Your call.
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peacejogger
  |     |   22 posts since 2011
That does sound suspiciously like they are leaving an escape clause for themselves. I would certainly want some clarification. At least one bank and one credit union that I have used in the past changed their early withdrawal penalty on existing CD's, so nothing would surprise me. With banking regulations being rolled back at a record pace, I don't think we can look to any government agency to rule against the banks should a disagreement about something like this arise.
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paoli2
  |     |   2,641 posts since 2011
This the main reason why being paranoid with CDs is the best! If we think any info is included that gives the banks and/or cus the ability to lower the rates or raise the EWP especially "after" we buy the CD, we must insist on something in writing to attach to"our" particular CD stating they won't before we give them a penny of our money. If they play hard ball, we should find an institution that will cooperate with us. Once we give them our money, we have lost the ability to complain. It must be before!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, regrettably, CD contracts are drafted by the financial institution's lawyers. I would be (happily) amazed if you could get a CSR or low-level banker to alter the terms as you suggest. But, as they say, no harm in trying. You seemed to have pushed the right button. I hope the letter you received was clear and unambiguous.
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Bozo
  |     |   1,375 posts since 2011
Peacejogger, as I've noted in other threads, the NCUA took no action when Ft. Knox FCU changed its EWP for existing CDs. As I recall, many DA readers with existing Ft. Knox CDs complained to the NCUA, to no avail. The problem, in a nutshell, is what we (retired) lawyers call a wrong without an effective remedy. If your EWP gets changed mid-stream, you don't really have any monetary damages unless or until you try to exercise the EWP. Even then, your "damages" would probably be miniscule. You'd have to go through your local small claims court, get a judgment, record the judgment, then attempt to collect on the judgment. As they say, good luck on that.

That said, a rate-change mid-stream (which would affect a broad swath of CD holders) might be an interesting issue. If class action status were permissible (hardly a given, but my knowledge of the Federal Rules of Civil Procedure is woefully quaint), a sharp lawyer might take the case.
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paoli2
  |     |   2,641 posts since 2011
Bozo, in my dispute, it was very clear that the different language was purposely added hoping customers would not notice it. If that is the kind of deceitful lawyers this particular bank has, it deserves to be brought to the attention of the President (or your hot dog guy) so they will know there "are" customers with a watchful eye who just might tell other customers about the CD "error" language. I had 5 CDs with this bank and they had a good chunk of money to lose out on getting if I walked away. I think if more people actually read their CDs and the Disclosures "before" buying and refuse to accept those lawyer additions, we all might get more of a fair shake from the banks.
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Bozo
  |     |   1,375 posts since 2011
Paoli2, we lawyers (retired or otherwise) have an expression: "no harm, no foul". If you were able to get that letter from the President of the Bank stating what you said it said, then "no harm, no foul". As I noted to poster "Peacejogger", the wrong without a practical remedy is a head-scratcher.

Let's examine CDs, in general. For the most part, CDs offered on DA are all over the country. For those which offer "easy membership", the financial institutions are still located in "whatever". If you have a beef with said financial institution, where do you go? Utah, Montana, New York...? As noted, neither the FDIC or the NCUA will help you out.
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Bozo
  |     |   1,375 posts since 2011
Moving right along, back in my youth, I was sending money all over the Continent, chasing rates. I never got burned, not once. But, as I am now a bit wiser, and much older, I ask myself "what was I doing"?
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paoli2
  |     |   2,641 posts since 2011
"What was I doing"? Easy answer. You were probably bring home all that higher interest you couldn't get at home! Just as I was and probably many of our DA members. It's what has helped us survive on these low interest rates we have now. But......at a certain age, we have to be grateful we had the sense to do our roaming cause now there's "no place like home"!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, my wife and I had a long discussion about out-of-state CDs. As I noted to poster "Peacejogger", if you get "burned", your remedies, if they exist at all, might be limited. Before the issue arose with Ft. Knox FCU, and the subsequent inaction by the NCUA, I assumed we CD holders had a friend in Washington. I no longer assume anything.

As a result, I am willing to accept a few basis points less these days, and keep the funds local, with financial institutions I know and trust.

As they say, return "of" capital.
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paoli2
  |     |   2,641 posts since 2011
Do I hear an "AMEN!!" Local it is! Have a good day all!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, the scary thing is "rates and APY are subject to change without notice". That statement is quite clear, and obviously drafted by a lawyer. So, if you buy a 5-year CD at 2.6%, and one month in, the bank or credit union changes your rate to 1.0%, do you "have a case"?
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paoli2
  |     |   2,641 posts since 2011
Bozo, eat a few hot dogs or burritos and read my post below. "I" sure would have a case! Because I read my Disclosures before I buy and I have my "proof". If they tried to pull a fast one on this gal, they would find me contacting the CEO and if possible "in person"! If you are reading "rates and APY are subject to change without notice" on any CD you actually purchased, I am concerned that you would do that. Go look at your CDs and I have a feeling the statements are more like what are on mine. Your spouse sounds like someone who is in to CDs so she would have probably caught it if you didn't. I can make my case with any lawyer but just be sure "you" can. Check those CDs.
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me1004
  |     |   1,379 posts since 2010
Re the bit of do we have a friend in Washington. I filed a complaint against I don't even recall which institution some years back, and with the appropriate federal oversight agency -- don't recall if that was the FDIC or whom. The point is, I went to a lot of trouble to write up the problem and explain it, including all documentation I had to really show what I was saying was so, and filed the complaint with the oversight agency.

All they did was note who it was against, send the complaint over to that institution for a response, that institution sends back a blanket, standard denial, just saying no, that is not correct.

With that, the federal oversight agency dropped the matter and sent me a letter stating what I just said, that they had sent the complaint to the bank/CU (whichever it was), they had denied it, so case was closed. They did not look into anything I had written, they gave no indication that they asked for any documentation or proof at all from the bank/CU, they simply let the bank deny everything and that was end of investigation, and closed the case without even asking me if I had any response.

I never presumed they would find in my favor, because I am well aware of the biased involved in enforcement, but I was very shocked that they did nothing at all other than accept the bank's denial and close the case.

And the banks and CUs all know this is how it is handled. And apparently unless the bank admits they violated the rules, no investigation is done and the matter is dropped.

Is it any surprise it took so many years to nail Wells Fargo -- which happened only after the Los Angeles Times ran a big, multipage story about the crooked operation, and so the regulators finally felt they had to do something, which they had not done over all the years of problems; I'm quite sure they had complaints over that time?
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paoli2
  |     |   2,641 posts since 2011
Ok folks, because it seems there is a confusion about what the banks and cus can and cannot do with our interest rates and I have already eaten my burrito, I will share my knowledge with you. First of all, I got out several of our CDs to see what was actually written on them. When you are reading rates "can" change they are basically advising us the rates are only available for a certain period so if we see a rate we want, we should buy it because it can change daily and may be different tomorrow.

However, (and I am starring at my proof) once we buy a CD for a certain rate, THAT rate is set in for the period of time listed on the CD (3 years, 5 years etc.). It is a contract between the customer and the bank that the bank (or credit union) will pay the customer that interest rate until the maturity date listed on the CD. Examples of info on some of our CDs: (If I tried to list them all, I would need to eat a case of burritos! :) )

Rate information: The interest rate for this account is ______with an an annual percentage yield of ___________. This rate will be paid until the maturity date specified above.

Another CD reads by Rate Info: You will be paid the dividend rate in effect on the issue date for the term of your certificate.

Note: Check your CD under "Rate Information" and you should see the same type statement. This, in my opinion, assures us they cannot change the interest rate on "our" CD once it is purchased. In over 60 years, I have never had any bank or credit union do that even the ones who where taken over by another bank usually allowed us to keep the rate until it matured.

Since so many of us use Navy Federal you need to check under "Change in Terms" for theirs. Mine states: "Once issued, the terms of a Certificate/SaveFirst Account may not be changed without the owner's consent" . "Sooooo if anyone "ever" has this happen to them just stick a copy of their own Rate Information under their nose but make sure you have purchased only CDs that are written with this type of rate protection. If they aren't don't buy their hot dogs but go to a different vendor who does give you this protection. (or try "burritos with cheese and sour cream" yummy. )

No thanks required but will never refuse burritos!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, I, as well, love burritos. My point was simply about logistics. If a financial institution breaks the terms of a CD, whether it be EWP, rate, term, whatever, the owner of the CD is facing an uphill battle for relief. Let's assume, for purposes of argument, your CD is with an outfit in Alexandria, Virginia. They issue the CD for 5 years at 2.5% (mind you, I'm just stating a hypothetical). Two months in, despite the clear terms of the CD, the outfit just stops paying interest on the CD. Their website is shut down, and their phone is disconnected. You call the FDIC or NCUA, whichever is applicable, and are told the "outfit" is still in business and insured. You politely tell the "regulator" you are not getting any interest on your CD.

You are then put on hold.

Eventually (mind you, this is just a hypothetical) you are disconnected.

I would just add a dash of guacamole along with the sour cream and cheese. Hint, do NOT warm the guacamole and sour cream in the microwave.
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Bozo
  |     |   1,375 posts since 2011
Paoli2, why I get somewhat nervous and jerky sending money across state lines to folks I don't know is right up there with the "hot dog guy". Totally funny (but true) story. Several years back, I was contemplating a CD at an "out-of-state" institution. I called the number, and the person attending the phone answered on the first ring. Hmm, that seemed odd. I asked her to send me the paperwork for joining the credit union and applying for the CD. She did so.  My address, along with the return address, was hand-written. The postage was with stamps. Not a postage meter, stamps.
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paoli2
  |     |   2,641 posts since 2011
Bozo, first, I LOVE guacamole!! I just refuse to eat it since I won't be able to keep wearing my petite 6, 20 year old clothes for another 20 years and can't buy more CDs if I have to buy "new" clothes! :) 20 years??? I just forgot how old I really am!
Anyway, first of all, I only buy CDs across state lines like fine stalwarts like Navy Fed or Penfed etc. It is usually in-state the spouse and I have worn out tires finding which banks can give me higher rates. Now it's down to in-town by threats from my adult child of never seeing my grand-cat if I don't bring it closer to her! I always want my financial institutions to be where I can personally get to them to humililate them and myself with an Italian Screamfess if they try to pull something on me. Before I would call those other "do nothings" I would want to get to them and see for myself if they are still in town.

But this is why I am no longer willing to put our hard-saved funds with any bank or cu I feel as certain as I can be that is in good enough shape to be around longer than me. Besides, jumping up on desks and throwing papers all over the room was a heck of a lot easier some years ago. (Yes! I was known to have done such a thing and it did get me the results I wanted. No! I was not arrested but complimented for my determination to settle my problem in a most unusual way.)

Also, good catch on your part for the envelope written in hand.  Doing too badly to own a computer or typewriter and no postage machine??  Hope you didn't send them your money.

Gosh now you have me hungering for another burrito but with that blasted guacamole. Who warms guacamole or sour cream?? Yucky!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, I suspect many folks just lather on the guacamole and sour cream, and plop the burrito in the microwave. Not a good idea.
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paoli2
  |     |   2,641 posts since 2011
Bozo, and those folks probably buy their CDs at Chickafilarama. The only way to eat a frozen (you sure don't think I make the real ones) buritto is to microwave is one side 40 secs put "one" slice of American or Cheddar cheese on it after you turn it over, microwave 43 secs , take out and put cold sour cream on plate and LOTS of thin chrispy Tostito chips on side. Then eat until you are sure you can still pretend you are 20 years.

OK! I think we are wayyyyy off topic so I better rail us in before Ken gets his deleters to send us into the corn fields. But food has to be bought with money so posting about our burritos is not really that far away from discussing CD rates. BTW, guess who is running a fantastic 6% CD for 2 years? Can't guess?? Neither can I but at least I got CDs into the topic. Have a nice day!
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Bozo
  |     |   1,375 posts since 2011
Paoli2, the key is timing. One must first microwave the tostada. About 30 seconds, with butter, is usually fine. Then, one plops the meat and cheese (never the guacamole and sour cream) into the mix. Then, the burrito goes into the microwave. A couple of minutes should suffice. The guacamole and sour cream (a dollop of each) are served on the side, ice cold. Use garden-variety toothpicks to hold the burrito together while heating.

Burritos are easily as interesting as CDs, if not more so.

Always pre-heat the tostada. Nothing worse than a burrito hot on the inside, and cold on the outside.

PS: If you must insist on salsa (as my wife does) start with the "mild" variety.
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paoli2
  |     |   2,641 posts since 2011
Bozo "start" with the "mild" variety?? I may love this type of food but my stomach doesn't. It's always "mild" for me in everything but my emotional state. A CD guy who can cook! I think I must be paying for the mistakes of my 10 last former lives. :)
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Bozo
  |     |   1,375 posts since 2011
Paoli2, my wife loves the hot salsa. I made the mistake of putting it on a burrito once. My mouth erupted in flames. She now has two salsa containers: "his" and "hers".

For the burrito purists out there, do you prefer (a) ground chuck, (b) pulled pork, or (c) slivered tenderloin? I'd opt for (c). As for cheese, be a renegade. Try freshly-ground parmesan.
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Bozo
  |     |   1,375 posts since 2011
Paoli2, there's "cooking", and then there's "microwaving". I'm handy with the latter.
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paoli2
  |     |   2,641 posts since 2011
Bozo, you have proven you have two special skills. You can read and you can push buttons. I sure hope your button pushing ends with the microwave. :)
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