Has Anyone Heard Of A Bank/CU Refusing To Close A CD Early?

  |     |   35 posts since 2015

I know CDs have Early Withdrawal Penalties (EWPs) for closing or taking out funds before maturity.

But has anyone ever heard of a Bank or Credit Union where they refused to either allow early partial withdrawal of funds, or a complete early closing of the CD? (even with the penalty).

Some places have in their CD Terms just the penalty language, though in the past I've seen others with language stating that it's up their discretion whether or not to allow such early withdrawals.

Regardless of the Terms/fine print, has anyone heard of a Bank ot CU actually refusing either an early partial withdrawal request or a full early closure of CD (even with penalty)?


  |     |   684 posts since 2015
The answer to your question is "Yes".

In 2008, Ken Tumin wrote an article titled "Issues of Long-Term CDs and Early Withdrawal Penalties". Here's an excerpt:

Can banks refuse an early withdrawal request?

The other concern that some readers have mentioned is when the bank has a clause in their disclosures that state they have the right to refuse an early withdrawal request. Penalties would apply only if they consent on the withdrawal.

I haven't seen cases where banks have used these clauses to prevent customers from making withdrawals. It appears this is rarely used by banks. But since it's in writing, it is possible, and it is a legitimate concern.

I asked Chris at Jumbo CD Investments about this, and he remembered two cases in which a bank refused to release funds. In one case, the bank ended up working with him and his client. They were able to have the bank release the funds after negotiating a higher penalty. The other bank would not budge, and it refused to release the funds.
(italics added)
  |     |   657 posts since 2020
Called breach of contract! Must have a cash flow problem…involuntary bankruptcy solves those problems…talk to an attorney

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