Does Penfeds CD Policy Cheat Us Out Of A Days Interest?

Ally6770 | Jan 4, 2021 | 4,306 posts since 2010

I would assume the transaction was not done on the 1st because it was not open for business. It was a holiday. Even pension deposits by law are not put on the first if it is a legal holiday but on the next business day after the legal holiday. So all the deposits will not be put into the accounts until the 4th. Even the stimulus check will not be put in until Monday the 4th.

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Kaight | Jan 5, 2021 | 1,192 posts since 2011

I have run into this situation elsewhere. It is not an intentional money grab in my view. It is, instead, a failure of IT at some (not all) financial institutions. In my experience there is a way around this. But you must telephone the financial institution on the day of maturity and ask to have your funds moved to your savings or checking. If your maturity day happens to be on a Sunday you're in trouble. But once the funds are in an account you can access via ACH, or with a paper check, you are on your way to withdrawal.

me1004 | Jan 4, 2021 | 1,381 posts since 2010

Glad to hear I'm not the only one who finds such delay practices unfair, even if notified in disclosures. You locked your money up until maturity, not until maturity plus an extra free day. If its still locked up, it should get another day of interst. I'm presuming that if you have, say, a 1-year CD, or a 365-day CD, the maturity date was the last day of one calendar year, as in 365 days. If they want one more day, they should call it a 366-day CD and pay for that day.

I have come across some places that say it has to be done like this because if you were to close the CD before the end of the day of maturity, you would not get interest for the maturity day.

This can be very singificant money for the financial institution mutiplied by all the CD accounts. It can even be notable for the individual. Imagine if you had the max NCUA amount of $250,000 in it, and in better times you were getting 3.5% interest, that would be a loss of almost $24 for that one day! But actually, it would be a loss of the interest you would get at a new CD, which might be even more.

I have come across this issue at some other places, but not at all. There needs to be a standard for this, and everyone has to handle it the same. I encourage you to follow Alan1's advice to contact the NCUA and ask into it. And if you do, please come back and let us knwo what they said.

lou | Jan 6, 2021 | 1,004 posts since 2010

I don't like this policy of releasing CD funds a day after the CD matures, but in this case it was unavoidable. The certificates matured on Jan 1 (Friday) a holiday, so the first business day the funds could be redeployed elsewhere was Monday the 4th. Three days of lost interest because of the holiday weekend.

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