GTE Early Withdrawal Penalty

IGR
  |     |   105 posts since 2020

Has anyone had an experience of breaking GTE CD and taking on Early Withdrawal Penalty?

I am coming across the situation arguing with GTE how to properly calculate EWP.

Can't figure out if this is the case of me being stupid, GTE being smart or... GTE being dumb to think that everyone stupid.

Potential out come is that GTE has been overcharging its members.

Appreciate



Answers
SouthernGirl
  |     |   58 posts since 2022
IGR,
Have you received the dividends monthly? If not, withdraw the dividends that have been posted. It is so simple to have GTE to mail a check for dividends. Confirm that the principal balance is your original amount that you opened it for originally. After the dividends have been paid to you, there will be no dividends to take a 180-day dividend penalty. There should be no loss of principal. Confirm that the closing amount is equal to the principal and plus interest that is accrued and close the CD. According to GTE Truth and Savings disclosure, there is a 180-day dividend penalty. It does not disclose a principal penalty or a principal loss. Do not argue. On day one, just ask for the dividend withdrawal. On day two, just ask for the closing amount. If you agree, then close the CD.
lou
  |     |   907 posts since 2010
Are you saying that after you withdraw all the interest penalty free, you can withdraw the principal without paying an EWP?
SouthernGirl
  |     |   58 posts since 2022
Lou,
I received 4 monthly interest checks. When I got ready to close the CD, I requested an interest check for the accrued amount of interest to be paid to me and I called the next day and closed the CD and received the full principal amount with no EWP or loss of principal.
lou
  |     |   907 posts since 2010
That's amazing. Why only 4 monthly interest checks? Shouldn't it be 6 to represent the 6 months of interest? Is this a CD you just bought 4 months ago? What was the term of the CD? Not sure I quite understand what has happened here?
SouthernGirl
  |     |   58 posts since 2022
Lou,
On 10/17/17, I bought a 30 month CD @ 2.75%. I received interest checks for Nov 17th thru Feb 17th. I requested an early accrued interest check for Feb 18th thru Mar 8th.
I closed the CD on Mar 9, 2018. My experience is that GTE is a no loss of principal institution.
lou
  |     |   907 posts since 2010
Thank you, SouthernGirl. I have read all the disclosures for my GTE CDs and it appears you are right.
lou
  |     |   907 posts since 2010
SouthernGirl, I have one more question. Did you get the check for the accrued interest before you closed the CD? Did they agree to withdraw the accrued interest for Feb 18 thru March 8 before you closed the CD on March 9?
SouthernGirl
  |     |   58 posts since 2022
Lou,
Correction. I requested an early accrued interest deposit to share savings account for Feb 18th thru Mar 8th and it was deposited on 03/08/18. Per GTE, "You can get your accrued interest at anytime." I believe that I called back the same day to confirm the closing withdrawal amount and closed the CD. I requested the funds be deposited in share savings account. The funds were there on 03/09/18, because I invested with Sharonview on that date.
lou
  |     |   907 posts since 2010
Thanks, SouthernGirl
SouthernGirl
  |     |   58 posts since 2022
Lou,
You are so welcome. I have a suggestion. Some customers might want to withdraw their interest to actually reinvest it. A customer could ask, what is the interest that has been posted and have that amount put in the share savings account. A customer could request monthly interest deposits to the share savings account. At that point, a customer would be able to determine exactly when to close the cd based on the desired closing withdrawal amount and also the exact timing that you want to close the cd, due to interest rate peaks, or whatever. Receiving the interest and monitoring the closing withdrawal amount is the key.
MY2CENTSWORTH
  |     |   104 posts since 2016
SouthernGirl, Dream on! Unless I am misunderstanding all that you wrote, I seriously doubt that the scenario that you describe will work in the real world. Nice try though! I'll be interested in learning more from you and others.
SouthernGirl
  |     |   58 posts since 2022
My2centsworth,
It did work for GTE. It will work with Nasa Federal Credit Union, as both institutions seem to have no loss of principal.
lou
  |     |   907 posts since 2010
SouthernGirl, have you attempted this and did the credit union agree to it?
deplorable_1
  |     |   776 posts since 2020
@SouthernGirl: Hmmm INTERESTing I wasn't aware you could do that. You do have to hold the CD for at least 60 days though per their terms but this would make closing a CD essentially penalty free? I'll have to try this to confirm but thanks for the tip. I have another CD to close in the next few days so I can just withdraw the interest to the share savings first and then close the CD right?
IGR
  |     |   105 posts since 2020
"Do not argue"?
What is next argument to come? Do not read? do not think? do not speak?
I'll defer to GTE on the instances of "should be no"...
From the Certificate Disclosure
"which may invade principal"
From Truth and Savings
"Credit Union may deduct the balance of the penalty from any funds remaining in the share certificate"
Furthermore, GTE reserves the right to go after
"any other of your accounts at the Credit Union"

Of cause, I don't need to waste time arguing, I can see it through myself.
Others, may want to spend time understanding that individual opinions and testimonial occurrences may not hold the universal truth
CDsuckers
  |     |   55 posts since 2022
OK, jack.
You state that your calculation of the EWP doesn't match the CU's.
Ye, you won't give anyone the calcuations you are using (which means that you know jack, jack).
Someone gives you a concrete example of what they did.
And, you go cuckoo on her?
She said not to argue with GTE.
Not with you.
Learn how to read will you?
Geez, you are beyond belief.
denki
  |     |   14 posts since 2019
SouthernGirl,

Thank you. Thank you. THANK YOU!! :)
SouthernGirl
  |     |   58 posts since 2022
denki,
You are so welcome!
lou
  |     |   907 posts since 2010
Please explain what GTE did (use real numbers if you can) and I will tell you if they did it right.
IGR
  |     |   105 posts since 2020
I really wasn't looking for GTE advocates here.
It is either someone has a personal experience to share or doesn't,
but not to provide an insight to my instance.
sorry if that sounds harsh.
lou
  |     |   907 posts since 2010
The reason why I ask is because I have money at GTE and I am thinking at some point of taking an early withdrawal, so I really like to know how they are calculating the EWP. DM me if you don't want to share it with the community.
John19
  |     |   56 posts since 2022
If it's an add-on the EWP will be based on the current balance, not the original balance. 180 days interest for anything over a year I believe. I still have my 3.30% add-on, I'm hoping to keep it till next year so I can get a bigger tax break. But I might have to break it sooner.
SouthernGirl
  |     |   58 posts since 2022
John19,
I sent you a private message.
CDsuckers
  |     |   55 posts since 2022
With a snarky remark like that you've made me a GTE advocate.
You want help but won't even provide an example?
What do you think we are?
Mind readers?
Geez.
111
  |     |   259 posts since 2019
On the GTE CD Early Withdrawal issue here's my 2 cents. I'm reading my “60 Month Add-on CD Disclosure” form (different from my “GTE Account Disclosure” form, BTW), for my 5-year add-on CDs bought in April 2019. This form is contemporaneous with my CD purchase. The paragraph titled “Early Withdrawal” states - “Withdrawals before the maturity date are subject to an early withdrawal penalty. The credit union may require up to 60 days written notice prior to any intended withdrawal in accordance with federal credit union bylaws. The penalty is calculated as a forfeiture of part or all of the dividends. Withdrawals within six days of opening a certificate will be assessed a penalty of seven days dividends which may invade principal. The penalty applies to the amount withdrawn each time a withdrawal is made, and is based on the dividend rate in effect at the time of the withdrawal. The penalty will equal 90 days of dividends for accounts with terms of 12 months or less, and 180 days of dividends for account with terms greater than 12 months.” (italics mine) BTW this CD has a 180-day EWP.

So - a few things -

1) The part having to do with this thread seems somewhat internally inconsistent. If “The penalty is calculated as a forfeiture of part or all of the dividends.” is considered to be strictly true, then technically how can “Withdrawals within six days of opening a certificate will be assessed a penalty of seven days dividends which may invade principal.” ALSO be true? It should have been worded better.

2) In any case, aside from that the text seems to limit any “invasion of principal” to withdrawals made “within six days of opening”. Invading principal is mentioned nowhere else in this paragraph, or in the entire document.

3) The text clearly does give GTE the right to delay withdrawals up to 60 days.

4) SouthernGirls' 30-month CDs were bought much earlier than my 60-month CDs, and from her posts here it's not clear whether hers were add-on CDs. I bring this up only because considering the long time period GTE has been offering CDs with at least halfway decent rates, and the many different type of CDs they offered, they may well have multiple disclosure forms for their various CDs that differ in small but important respects for EWPs.

5) I do know that recent GTE 6-month CDs like deplorable_1 has (which are not add-ons), have “Early Withdrawal” text exactly like what I listed above for my 60-month add-on CD bought in April 2019. It seems like he (tentatively) got good results.

6) So... it seems at least possible that SouthernGirls' idea MAY work for the many people on this forum who bought GTE 3.0 - 3.3% CDs during the last rate rise (2018-early 2019). I broke my purchase into several smaller CDs, so I'll probably try this with the smallest one first.
SouthernGirl
  |     |   58 posts since 2022
111,
Thanks! You cannot talk to a CSR agent in Member Care Department, as they only handle general questions. You can talk to a CSR in Member Experience Department at 1-888-871-2690, Ext. 40453 to withdraw interest posted, without a penalty. You will need to find out when the interest is posted into the principal, to assure that you are receiving all of the accrued interest. After you have all of the interest (that GTE owes you) credited to your share savings, on the same day I would personally call the Member Care Department 1-888-871-2690, Ext. 40401 and ask for the closing withdrawal amount.
lou
  |     |   907 posts since 2010
For everyone whose first instinct is too lash out at SouthernGirl or get upset generally that their may be a way to withdraw money from a CD without paying a penalty, try to relax. This is a good thing, not some major problem that requires you to disparage the person who is telling you this or the credit union or bank that is allowing it. If it works, great; if it doesn't, so be it. The last thing you want to do is act like a crazy person with the credit union, resulting in them ending this feature. Think before you act; or better yet use whatever common sense you may possess.
111
  |     |   259 posts since 2019
One might add to lou's comment (just above) that there are many scenarios, given today's rate environment, where having to pay a 6-month EWP on a 5-year CD, as mine is, still makes quite a bit of sense even without the benefit of any “added enhancements”. So clearly discretion can be the better part of valor, as always.
CDmanFL
  |     |   90 posts since 2019
For those of us with the 3.3% add on CD from 2019, I’m thinking it’s almost time to break it and pay the 6 month penalty. What does everyone else think?
lou
  |     |   907 posts since 2010
Wait. You'll regret it if you do it now.
Choice
  |     |   828 posts since 2020
And do what with the $s? Nothing?
lou
  |     |   907 posts since 2010
That's not the choice. Liquid savings and money market accounts will soon be 4%.
CDmanFL
  |     |   90 posts since 2019
Buy a new 5 year at around 5%. That’s what I’m thinking.
lou
  |     |   907 posts since 2010
CDmanFL, is this 5-yr 5% CD a brokerage or direct CD? If direct, which bank or credit union?
CDsuckers
  |     |   55 posts since 2022
Used this sites tool.
With a non-callable CD available at 4.95%, the magic eight ball says to break it.
Of course, that's based on a term of the same duration as the maturity date of the current CD.
lou
  |     |   907 posts since 2010
That would be right if you assume rates are not going much higher. Since the Fed is indicating a terminal rate of 5% or higher in 2023, it's hard to see how 5-yr rates won't be near or greater than 6%. We have been having this argument since August when brokerage CD rates were 3.5%. It hasn't worked out for those folks. Are you one of them?
racecar
  |     |   71 posts since 2014
IGR, can you at least use "substituted" numbers? You don't have to use the real amounts, but substitute different numbers instead. What is it you think GTE is doing wrong? For instance, if you wanted to take out "$100" (as an example) early and they're charging you a penalty, it should be 180 days (6 months) of interest on that $100 you want to take out early. Are they asking for extra fees or telling you it's more than 180 days worth of EWP?
lou
  |     |   907 posts since 2010
Or better yet, describe what they are doing or their methodology w/o using any numbers.
deplorable_1
  |     |   776 posts since 2020
The EWP for closing a GTE CD is 90-180 days of dividends depending on the length of the term. You also must hold them for 60 days before closing. The only ones I have closed were a few of the 6 month CD's at .01% a while back to free up some cash and paid a penny or two to close them.
lou
  |     |   907 posts since 2010
Deplorable, the poster I think is claiming they are doing something different from what you described. What you just said is the way I am assuming they are calculating the EWP.
IGR
  |     |   105 posts since 2020
@lou.
You are assuming everything on behalf of everyone?
Neither poster nor responder described anything!

It is not helpful at all.
In the absence of individual experience of ACTUALLY taking EWP, most o the assumptions, opinions or general feedback is either wrong or inaccurate.
According to GTE's SHARE CERTIFICATE AND IRA SHARE CERTIFICATE ACCOUNT DISCLOSURE the issue can not be assumed as "no loss of principal institution", "based on the current balance", "days (6 months) of interest" or even as "180 days".
GTE Disclosure describes two slightly different methods of imposing EWP, one as calculation and another as forfeiture. The difference is virtually invisible to unsuspecting eye. But the differences in the result will definitely be magnified based on the term and balance.
I have pretty large CD and when I asked GTE to quote me EWP for Early Closure 18 months prior to maturity, the difference between my calculation and GTE "methodology" came out noticeable and significant.
I haven't proceed, therefore I have no hard data to share but the assumptions.
I will ask GTE to quote Partial Early Withdrawal, to force them into actual calculation of Penalty. If, as I suspect, the results of Partial and Full Withdrawal will diverge, I'll update the forum.

@lou, where you have similar Deposit and concerns, you may want to contribute by going directly after the source.
Contact GTE, ask them for the EWP quotes, so we could compare experiences.
Maybe then Deplorable and SouthernGirl will get refunds, pennies or dollars.
SouthernGirl
  |     |   58 posts since 2022
IGR,
All you have to do is to withdraw all of your interest and have it deposited into your share savings account and then ask for a closing withdrawal at a later time. The closing amount should be your original balance. No penalty. Are you afraid to ask for the interest to be paid to you? Then check the closing amount.
CDsuckers
  |     |   55 posts since 2022
You are not helpful at all.
Give us your calculation with specific numbers.
I'm getting the feeling that your just another math challenged Republican.
You run off at the mouth about other people.
Yet, the information that you are providing is totally useless.
IGR
  |     |   105 posts since 2020
@Deplorable, I must say, I am impressed.
Andrews just announced the Special and you already turn it into action!.
I understand it is just few pennies, but it would be helpful to know how GTE imposed the penalty.
Have GTE calculated the penalty or simply reversed the dividends paid as forfeiture?
Should be the same "methodology" for pennies or thousands of $$$ worth of EWP!

In the follow up... how do you max out Andrews CD with "NEW MONEY" if no funds could be added after Certificate is opened and initial funding is limited to $10500 via external ACH or internal transfer of funds already on the account with Andrews?
CDmanFL
  |     |   90 posts since 2019
SouthernGirl said “GTE is a no loss of principal institution.” Is this something for real? I have a large CD at GTE at 3.3% and I want out. I’ll put it in a 5 year at 5%. The gimmicky stated above sounds all too gimmicky to really work. But if someone has truly broken their CD at GTE and paid no penalty please let us know. I’m resigned to the fact that I’ll need to pay a 6 month penalty and I’m fine with that but of course I’d rather not pay it if I don’t have to. Just very confused by the comment “no loss of principal institution.”
lou
  |     |   907 posts since 2010
CDmanFL, is this 5 yr at 5% at a brokerage or credit union/bank? If latter, can you tell us which credit union?
CDmanFL
  |     |   90 posts since 2019
It would be a brokered CD. I’m almost maxed out with both Capital One and Discover so I’m hoping another bank offers a brokered CD at 5% for 5 years, non-callable of course.
CDmanFL
  |     |   90 posts since 2019
Loving the ease and simplicity and quickness of the brokered CDs. And whenever rates fall, they’ll be worth more than par. It would then be a great time to cash out provided that I have some good add-on CDs, but unfortunately there are not any really good add-ons in the market right now except for MACU which I’m already maxed out on. Let’s hope some good add-ons come our way in the near future.
deplorable_1
  |     |   776 posts since 2020
Great question IGR. I'm planning on doing an ACH push of $100k from Dominion Energy(DERI) to Andrews share savings(actually to the 5% savings account if possible). I believe the rules are: internal ACH limits $5,000/day $25,000/mo. no limit on 3rd party ACH transfers. I have a few questions in a secure message I sent to them and I should get a response on Monday if not I will call to confirm.
I once used a shared branch to make a check deposit and that was a huge pain since the shared branch wanted to impose their deposit limits on me. I ended up getting it done though after getting a bit angry and having a 3 way call with someone at Andrews.
Then my next CD I did a large ACH push instead and it worked to get around their small internal ACH transfer limits.
deplorable_1
  |     |   776 posts since 2020
Ok actual numbers I just closed out 2 $5,000 GTE .01% 6 mo. CD's. They were 5 months in and worth $5,000.20 I was charged .12 cents per CD to close. So if we assume .04 per month interest it looks like 90 days was the fee. Now I also asked about closing a 6 mo. CD at .80% but the 60 days is not up until next week. The CD is worth $5,003.18 and they said the fee to close it would be $3.18 I declined and said I'll wait till the 60 days are up to follow their terms. I think I will try and transfer out the interest and then close it and see just what happens. I'll ask if I can do that without a penalty first though.
SouthernGirl
  |     |   58 posts since 2022
deplorable_1,
On the last example, do you agree that the 90 day penalty should be about $10.00 versus $3.18? I believe that proves no reduction in principal. You already know that the penalty is for the interest that has posted, based on the closing withdrawal that you have been given. Withdraw the interest, and only ask for the closing withdrawal and that should be $5,000.00. No need to ask anything about a penalty. The closing amount is all that you need at that point.
deplorable_1
  |     |   776 posts since 2020
Yes I agree about $10 should be the 90 day fee. I was only going to ask about a penalty because I didn't know you could just pull out your interest at any time fee free I have never done that before. The funny thing is that they were going to actually close the CD before 60 days was up until I informed them of their own rules. Thanks for this tip btw as I do several CD's with them per year. I don't usually close CD's early but the rates were so low I figured why not. This will come in handy if I need some extra cash and my CD's are over 60 days in.
SouthernGirl
  |     |   58 posts since 2022
deplorable,
FYI, after the 60 days, please assure that you have 60 days of interest posted in the amount of $6.66. That is why it is so important to know when the interest is posted and not in accrued. If you know there is accrued interest, you can always have that withdrawn as well, before you close CD. Always calculate and confirm the interest that GTE owes you, which can be a combination of posted interest and accrued interest. It is best to close the cd the day after the interest has posted to the principal and of course after the interest has been paid to you. This will come in handy to a lot of investors.
SouthernGirl
  |     |   58 posts since 2022
Deplorable_1,
On a second thought, I believe GTE was going to take your accrued interest and apply it on the EWP and did not tell you. However, that would be interest only and it would not be equal to $10.00. Therefore, no loss of principal on EWP.
IGR
  |     |   105 posts since 2020
I refuse to categorize what I started myself...
First of all, thanks @deplorable for responding...unfortunately that was not helpful.
dealing with fraction of cents generates nothing but rounding error deviations.
60 days is not for the age of the CD, it is for the advance notice to close CD prior to maturity and for GTE to refuse/delay early closure.
However, are you sure that .8% $5000.00 CD is worth $5003.18 more than 30 days in? would it have to earn 10.9 cents of daily interest and be worth $5003.28 on the day 30? If 10 cents per dividend cycle doesn't look significant enough, imagine you have $500,000.00 CD and the penalty is doubled.
the difference would have to be multiplied by 200!
Would anybody agree then that "The closing amount is all that you need at that point."?

... finally SouthernGirl gets something right. Indeed, MAXIMUM penalty in given example would be $10...
It PROVES nothing beyond the instance that under these particular circumstances the penalty would be no more than $10.00. However, when SouthernGirl's advise is followed and only $9.00 remains on the CD balance, $1.00 would have to be sent to GTE to have CD closed prior to maturity... call that "no reduction in principal" as you wish.
Amid that, my only advise is; do not BELEIVE, always read thorough, understand and proof calculate.

As follow up to follow up.
@deplorable, I'll appreciate if you keep me updated on anything you learn from Andrews.
I'm afraid, we'll be competing for the attention of very few CSRs Andrews has available for us.
I am not eager, because I'm patient enough to bet that many more 5% deals are coming in short, but since I've been idled member of that "distinguished" institution for years, I'm willing to give it a benefit of the doubt for being trendsetter.
It bugs me though that Andrews has its operations outsourced and established Customer must submit the proof of identity as New Member would.
SouthernGirl
  |     |   58 posts since 2022
IGR,
Why can you not see that GTE was not going to charge the $10.00 early withdrawal penalty? GTE quoted EWP to be $3.18, which is the interest that was posted to the principal balance. Withdraw the $3.18 of interest, and then close the CD for $5,000.00. You will probably need to insert your specific numbers, for you to understand it. In other words, get paid all of your interest and then see what GTE responds as the closing withdrawal. You were the one complaining and arguing about the EWP amount. I told you exactly how I received my jumbo principal funds with all of my interest first, and a closing withdrawal with no EWP.
racecar
  |     |   71 posts since 2014
SouthernGirl,
Really appreciate your posts and ideas, thanks.
CDsuckers
  |     |   55 posts since 2022
I just can't believe that taking out the dividend first gambit would actually work.
I've always assumed that you were going to eat the EWP regardless of that.
Of course, it could just be the luck of the draw with the CSR she got that day.
After all the following was posted.
"The funny thing is that they were going to actually close the CD before 60 days was up until I informed them of their own rules."
If they don't know their own rules on that what's to say that they're not EWP ignorant as well.
Especially if they don't see any dividends in the account.
If you're going to close it for greener pastures anyway, I guess it's worth a shot.
Stranger things have happened.
SouthernGirl
  |     |   58 posts since 2022
CDsuckers,
"You can get your interest at anytime." "You can get your accrued interest at anytime." I had been receiving monthly interest checks. It was not just that day. On 03/05/18, I asked for the closing withdrawal amount and the accrued interest amount. I determined that EWP would not be taken from principal. On 03/08/18, I asked for the withdrawal of accrued interest of $143.15 to be posted to share savings account. I called back the same day and confirmed closing withdrawal amount of $100K and closed the CD.
Ltssharon
  |     |   133 posts since 2020
Well , similarly my brother bought a 5 year cd at advantis. The early withdrawal penalties were : well I will make up an example. Let’s pretend: 1 yr cd has ewp of 90 days, 2-4 yr cds have ewp of 180 days, and 5 year cds have 360 days. In this example my brother bought the 5 year cd. When there was only 1 year left on that 5 year cd, My brother convinced advantis that the ewp he should get, cashing it out right the, should be 90 days because only 1 year was left on that 5 year cd. Good gravy! I would never thought of trying to convince advantis or any other credit union. Has anyone else been able to similarly convince a credit union? I think my brother declared that the ewp language was ambiguous.
lou
  |     |   907 posts since 2010
Wow, that's interesting.
deplorable_1
  |     |   776 posts since 2020
lol nice! That's sounds like something I would try. ; ) I once convinced a bank to cap the 3% balance transfer fee at $50 for me or I wouldn't ok the transfer. I couldn't believe they actually did it.
deplorable_1
  |     |   776 posts since 2020
This just reminded me I just closed out 3 more GTE 6 mo. CD's for pennies in order to max out the Andrews 5% 7 mo. CD.
racecar
  |     |   71 posts since 2014
I myself prefer to express it this way, circa 1980s:

10 PRINT "Huh?! %*)#@)&*^!"
20 GOTO 10
wm24
  |     |   7 posts since 2022
Has Southern Girl's method been working?
deplorable_1
  |     |   776 posts since 2020
It sure seems like Southern Girl's method will work after asking the CSR's some questions. I just had the dividends post on a 6 month CD with 60 days in so I will call or chat to get the dividends moved to the share savings next. Then I will need to ACH everything out of my share savings to prevent any claw back. It may take me some time as I'm having some ACH issues with my external FI at the moment. Then I will close the CD and post back the results here.
To whoever is reading this thread: Please don't ask any GTE CSR's directly if you can close a CD without any early withdrawal penalty. Nothing good will come of asking that. Best to just move dividends to share savings prior to closing a CD and ACH out first. Worst case scenario it doesn't work best case scenario no penalty. The Insight card(prepaid debit card) 5% on $5,000 savings accounts got killed because people were calling in and asking how many savings accounts they could open. I had 8 of them with 7k a piece all earning 5% when they nixed it down to 1% during the 0% years. Moral of the story don't let the CSR's know exactly what you're doing. Ok I'm done lecturing. lol
elbow1
  |     |   3 posts since 2022
I made the mistake of grabbing at cds with 3 percent or above when they became available thinking that they would go quickly down again. So for example I went for the depr of commerce cd for 5 years paying 3.17. Pretty soon I am thinking of breaking them and going higher. Since we just had a 75 bp hike I am waiting to see what new rates come. Glad to know that my phantom interest will be deducted from any real interest I make
SouthernGirl
  |     |   58 posts since 2022
elbow1,
Please read Truth In Savings Disclosure from each financial institution to determine if EWP is taken from dividends only and not principal. If so, withdraw all of the interest that is due to you, confirm the closing withdrawal amount and close the CD for the original principal amount, with no EWP. i.e. "interest may be withdrawn before maturity." Depending on the wording on the disclosure, there might not be a reduction in principal and there is no EWP.
CDmanFL
  |     |   90 posts since 2019
My wife called GTE and tried SouthernGirl’s approach and they said - very adamantly - no way that a CD can be broken without penalty even after removing the accrued dividends.
CDmanFL
  |     |   90 posts since 2019
And on top of that, the agent said there’s a penalty to withdraw the dividends. My wife hung up shaking her head and told them to forget everything.
SouthernGirl
  |     |   58 posts since 2022
CDmanFL,
Please read on this site for GTE for a 60 month cd, click account details, "Interest can be withdrawn before maturity." I have been a customer since 2017 and have always received my interest. This agent is incorrect. I suggest that you call and ask, "What is the amount of interest that has been posted to my CD?" Confirm the amount and transfer it to the shared savings account. Better yet, you might be able to go to a branch and receive a check for your interest, and then call back to get the closing amount. Just ask what the interest is and request the transaction.
CDsuckers
  |     |   55 posts since 2022
Even in an IRA account, you can take-out dividends.
It'll be a taxable distribution.
And, if you're younger than 59 1/2, you'll pay an IRS penalty.
But there shouldn't be an EWP on a dividend withdrawal on either a taxable or IRA CD.
So, the CSR was the usual 50% correct answer.
If I do something dicey like this I usually send them a secure email so that I get something in writing.
I've got to admit even though I despise IGR, this has been an interesting thread.
He still hasn't given a concrete example of what the EWP should be.
Then goes on a rant against other people when they provide details.
Now whether those details are correct comes down to the CSR that allowed it.
Kinda scary, eh?
SouthernGirl
  |     |   58 posts since 2022
Not dicey. Not scary. I am a banker. At GTE, In this rate cycle, get your interest first, then your principal and re-invest at a higher rate.
SouthernGirl
  |     |   58 posts since 2022
CDsuckers,
FYI, Mountain America Credit Union will charge an EWP on a dividend withdrawal, if it is being posted to the principal balance. It is on their disclosure. Therefore, it would be better to have dividends posted to share savings account at Mountain America in my opinion.
111
  |     |   259 posts since 2019
“And on top of that, the agent said there’s a penalty to withdraw the dividends."
If that's true, GTE does not list it in their “Schedule of Current Charges” -
https://www.gtefinancial.org/personal/rates-fees-forms-faqs/fees

I think part of the problem is the huge variation in CSR competence at GTE.
SouthernGirl
  |     |   58 posts since 2022
CDmanFL,
That was not my approach. I never asked the question if a CD can be broken without a penalty even after removing the accrued dividends. Yes way. The computer generates the information. In example, it calculates and stores interest posted and can disburse it. It calculates accrued interest and can disburse it. It calculates the  closing withdrawal amount at any given point with the rules applied. I believe withdrawing the interest first is the key.
CDmanFL
  |     |   90 posts since 2019
Ok I’ll try again tomorrow. Hopefully I’ll have better luck next time by getting a competent rep.
SouthernGirl
  |     |   58 posts since 2022
CDmanFL,
Please read my comment above to 111, on how to reach the correct CSR with GTE phone number and extension. Thanks.
RYP
  |     |   10 posts since 2022
Southern Girl,
Your response to 111 is absolutely correct.
SouthernGirl
  |     |   58 posts since 2022
RYP,
Thank you so much! Did any of this process work for you?
lou
  |     |   907 posts since 2010
SouthernGirl, besides NASA Federal Credit Union have you ever tried this approach successfully at any other credit union or bank? If yes, can you name them? And have you ever been told by any credit union they can't do it?
SouthernGirl
  |     |   58 posts since 2022
Lou,
I only did this at GTE. However, on 08/31/22, I opened a savings account only with NASA and inquired about receiving monthly interest checks and they said yes. I also inquired is EWP taken out of principal and they said no. I confirmed, "So, I will not lose any principal" and they said no. I believe PenFed may have this same policy. I am sure that there are other small, local credit unions that follow this policy.
lou
  |     |   907 posts since 2010
I don't believe it will work at Penfed if you initially request to have the interest reinvested and then ask to withdraw all interest retroactively. They consider reinvested interest to be principal. However, it may work if you have the monthly interest paid to you at the outset.
fred_b
  |     |   71 posts since 2022
I'm amazed this works. Clearly, GTE systems are messed up if you can effectively avoid any EWP. The intent obviously is that the depositor should forfeit 6 months of dividends (paid and posted or accrued). Yes some FI's will take less than 6 months of dividends if the CD is closed before 6 months of dividends have been earned (no loss of principal). But to also not lose any dividends earned (by withdrawing them before you close the CD) is remarkable. Sounds like GTE doesn't do its calculations correctly if you can get away with that.

You're right that PenFed doesn't take the EWP from your principal if you haven't yet earned 6 months of dividends. I just did one. But it didn't occur to me to try withdrawing all dividends earned before closing the CD. I find it hard to believe that PenFed would give you your entire principal back if they couldn't lay their hands on any dividends earned to date. I mean, it certainly wasn't intended to work that way.

So I believe you but I'm amazed that GTE is this dumb.

So it seems that GTE is clueless that customers can effectively avoid paying the EWP. If the depositor has already withdrawn all earned dividends, the EWP should come out of the principal.
SouthernGirl
  |     |   58 posts since 2022
Fred,
Are you confirming that you closed a cd with PenFed with no loss of principal in October 2022? I think that these are old computer systems that are designed not to take any EWP from principal. Rightfully so, if that is the institution's policy.
fred_b
  |     |   71 posts since 2022
SouthernGirl yes I closed a CD at PenFed with no loss of principal in September 2022.

There was supposed to be a 6 month EWP but I had only had the CD for maybe 3 months. So PenFed took all dividends earned to date and gave me back all my principal.

I think PenFed EWP rules are different once the CD has been open for more than 6 months.
SouthernGirl
  |     |   58 posts since 2022
Fred,
Thanks for confirming. I believe that if you had received your interest for the three months (either monthly or prior to closing the cd) that you would not have incurred an EWP at all. So basically it is the same policy that GTE is following.
SouthernGirl
  |     |   58 posts since 2022
Has anyone been successful in closing a PenFed certificate with no EWP and no loss of principal, by withdrawing the interest first, and then closing the CD?
SouthernGirl
  |     |   58 posts since 2022
Fred,
Were you able to close the CD at PenFed over the phone or did you have to do a written request? Thanks!
lou
  |     |   907 posts since 2010
Fred, I am going to disagree with you. There is an advantage for allowing people to reinvest their dividends in a declining interest rate environment, which is what we had the last 15 years. You are allowing them to reinvest at rates you couldn't get anywhere else, so it might make sense to penalize them for these dividends if they decide to withdraw them. People who took their dividends monthly didn't receive this advantage. Obviously, this really doesn't apply when interest rates are going up, something we haven't seen for many years.

Also, why disparage credit unions that allow this? it's like shooting yourself in the foot. Why would you do this? In other words, try to calm down and just appreciate that some credit unions are allowing this. Don't look a gift horse in the mouth.
fred_b
  |     |   71 posts since 2022
Hey lou don't worry I'm not going to tell these credit unions that their systems allow depositors to effectively avoid the EWP. I just don't think it's intentional. I think it's a mistake on their part.

Sorry if the tone of my post offended you.

Sure people should be able to withdraw their accumulated interest with no penalty and reinvest it as they wish. Many FI's offer that option.
lou
  |     |   907 posts since 2010
Fred, it's not about offending me, it's just that I don't want to taunt a credit union by calling them dumb when they are doing something that is advantageous for us. It's just commonsense.
Choice
  |     |   828 posts since 2020
Fred, why does a mistake by one party become the mistake of another? Never. One is not excused by their mistake! Never. If a contract permits more than one interpretation…shame on them and their so-called drafting/legal team!
lou
  |     |   907 posts since 2010
Choice, my point is why rub in their face. That makes no sense. Just appreciate that it is allowed. It's only commonsense.

I also think there may be good reason for allowing this. See my previous comment.
IGR
  |     |   105 posts since 2020
I am dumbfounded.
Every day we learn something new, until one day we realize that we need to re-learn everything anew.

First, on the issue on penalty on the Interest/Dividends Deposited to CD and the competence of CSR occasionally providing false information based on individual understanding and the issue at hand.
It is rather general subject unrelated to GTE and topic for separate conversation.
The competence of CSR is more or less universal and I have personal experience when CSR for different Institution would insist that ANY withdrawal(accrued Interest/Dividends included) is subject to penalty. It didn't work that way, either because I pushed back or because it doesn't work this way when they actually click appropriate button on their
Account Management System.
If the Account Holder would be penalized for the Deposits he/she didn't constructively make that would put Depositor/Bank relationship upside-down.

Anyway... not because I'm concerned about despise or desperate for appreciation, but because I promised
4 days ago, right before this conversation was started, I had a chat with GTE CSR.
We agreed on the amount of Interest/Dividends i could withdrew, but disagreed on the amount of EWP if i would close the account prior to maturity( I had no intention to actually close the account) GTE quoted me system calculated amount based on last 6 months of Dividend paid(consistent with Certificated Disclosure), I calculated the amount of penalty as 180 of the interest rate in effect on the basis of the cumulative Principal to the date(also consistent with Certificated Disclosure). due to the disagreement no actions were taken..., but I promised follow up
my practical advise is to whenever possible to have this conversations in writing, so the record is maintained...
Today, I had a chat with the same representative(or so I assume unless all GTE's CSRs chatting under the same generic handle).
First I requested the distribution of Interest/Dividends as I was going initially. After brief confusion where i wanted last Dividends paid or ALL dividends, all dividends Deposited to CD account since the inception were transferred to my share Account. Penalty issue was never brought forward in the process and it took about 30 seconds.
After the accounts balances were updated and cd balance reflected nothing but cumulative Principal, I requested additional sizable transfer of funds from CD to Share account.
Before I even finished, the response came as "I have moved that for you, it didnt charge any additiunal fee"(orthography original).
Where I have, the interest/Dividends earned plus sizable(6 figure) chunk of my CD moved, free of charge or penalty, to transactional account and available for ACH pull, which I promptly initiated externally.
I don't have any reasonable explanation of why exactly this is happening in GTE instance, the only rational guess is that GTE got screwed-up by its software vendors in the same way as recent NASB embracing snafu.

this little and sudden fortune is no joy to me, on the long run I get more benefit from transparent Regulations and Compliance and from consistent applications of the Rules of the Law.

I must bring my apology to SouthernGirl for being presumptively dismissive.
lou
  |     |   907 posts since 2010
Stop being a sanctimonious as*hole with the I get no pleasure or joy that I saved thousands of dollars. If you didn't, you wouldn't have done it. Just do the apology and shut up.
SouthernGirl
  |     |   58 posts since 2022
IGR,
Are you positive that you received all interest (including accrued interest for the current month) from inception through today on the amount that you had deposited? One comment was "all dividends deposited to cd account" and another comment was "the interest/dividends earned". Did you ask CSR to post the accrued interest for the current month to the cd account? Hopefully, you did not lose the accrued interest for the current month, if by chance that it had not been posted to the cd account. 
lou
  |     |   907 posts since 2010
SouthernGirl, if you don't close the CD and just do a partial withdrawal, it wouldn't be necessary to ask for the accrued interest.
SouthernGirl
  |     |   58 posts since 2022
Lou,
Typically, accrued interest is the first place an EWP is taken from on a withdrawal transaction on a CD. Please look back at deplorable's last example. (Accrued interest was being taken as EWP). I believe one reason is for the accrued interest to match up accordingly, with the new principal balance, after a partial withdrawal. If not, the financial institution would have no way to ever verify the amount of accrued interest on their system. I would have to review the calculation of total interest earned and paid. What if the accrued interest was taken for the EWP on the partial withdrawal amount, if it was still sitting there, as the CSR processed it? Really, no way to know unless the earned interest, posted interest, and accrued interest are verified ahead of time, before any withdrawal transactions. I am pretty sure that if IGR did not ask for the accrued interest to be paid, it was taken as EWP on the partial withdrawal transaction. I know in my scenario, the accrued interest was going to be taken as EWP on the closing withdrawal, prior to asking GTE to pay the accrued interest.
lou
  |     |   907 posts since 2010
SouthernGirl, wouldn't it work like withdrawals from any savings account? The computer software knows the accrued interest on the varying principal balances during the monthly cycle and pays it out at the end of the month. I do know when GTE pays accrued interest for an account that is not closed, they have posted it as earned interest on my account before withdrawing it. So if you make a partial withdrawal and no penalty is recorded, wouldn't it be safe to assume the accrued interest hasn't been taken from your account?

Their disclosure says any penalty is paid from earned interest.
CDsuckers
  |     |   55 posts since 2022
Depends on whether the CD is for an IRA or not.
If it's an IRA whether you're over 59 1/2.
GTE lets you take out 20% of the current balance without an EWP once per year.
On the taxable side, there aint no such animal.
Regardless of that, it looks like the withdraw the interest first gambit works.
This site's EWP calculator assumes that it doesn't.  Until maturity, you alway pay it.
Once GTE finally figures-out what's happening can they try to do a clawback?
Only time will tell.
lou
  |     |   907 posts since 2010
CDsuckers, this is not a mistake. It says in their disclosures that any penalty is paid from earned dividends. They are doing exactly what they outlined in their disclosure documents. It's best for us if we assume it's intentional of their part since they already disclosed it was going to be done that way. Let's not assume it's a mistake. I don't see how that helps us to keep saying that. If they want to change it, it will have to be done prospectively for new CDs. This is what I am going to insist on if they decide to change it.
IGR
  |     |   105 posts since 2020
That is interesting spin..
though it gets too academic and well beyond original scope of this thread.

Lou is very right, this is exactly how I approached it, I can wait for the end of this statement cycle for the Dividend to be deposited.

But SouthernGirl brings unexpected perspective. That EWP could actually have been taken behind the scene and outside of view... From Accrued Interest that is not the part of Current/Available Balance, and that is not routinely Reported to CU Members.
I can only say two things.
1. I am not going to chase the answer. I'll get the answer when next Dividend is Deposited.
2. Withdrawal Transactions took place only 2 days into new Dividend cycle, where accrued Interest would only cover tiny fraction of possible EWP, considering the amount of Partial Withdrawal prior to Maturity.

Internet anonymity allows some lous to act ridiculously juvenile without feeling Ridiculous. Perfect stage for Inferiority Complex display where smallest usually loudest.
I've done what I was going to do before some came out yacking and some provided relevant insight.
even if that sounds "sanctimonious", I'll say that I made thousands of dollars by learning the rules and using the rules.
Every time I find myself ignorant because I haven't learn something or the rules I adapted to has changed, I have to change my strategy or recalculate my goals. And that is not good for my business of making and saving thousands of thousands.
"DM me if really like to know how they are calculating the EWP."!!??
lou
  |     |   907 posts since 2010
Just read your own posts, IGR. You insulted SouthernGirl just because she was trying to help you. Then you get on a soapbox complaining how much you don't like making thousands of dollars, even though you did it when you didn't have to. You appear as an insufferable and sanctimonious ingrate. If you don't like being called out for being obnoxious, then don't do it.
CDsuckers
  |     |   55 posts since 2022
Methinks IGR is P_D in disguise...or, just equally insufferable!
And, you could have left off the "founded" part of the last word in your first sentence.
IGR
  |     |   105 posts since 2020
Again, juvenile ... but this time Oxfordy.
It makes me appreciate Mather Nature and Evolution.
Without some of you I wouldn't be as successful as I am.
lou
  |     |   907 posts since 2010
It's really hard to even understand what you're babbling about. However, if you want to compare your success with ours (I suppose you are measuring it in net worth), I would be willing to compare my total financial assets with yours.
IGR
  |     |   105 posts since 2020
Thanks for the entertainment, my little friend.
Sorry to disappoint you, but I quit this game around the age of 12.
One day every boy must learn that it is not the size, it is how it is used what matters.
Admittedly, you came out very revealing.
Now every adult on this forum must be weary of anything that comes out of this mouth.

Your input on the subject of "GTE Early Withdrawal Penalty" was truly appreciated.
lou
  |     |   907 posts since 2010
You're the one who made the obnoxious statement about how much more successful you are than other people on this thread. I was just responding to it. I really don't need to say much more, as all anyone has to do is read your posts to see what you're all about. Fortunately, this is the internet and I don't have to know you in real life. You're not my little or big friend, thank god.
IGR
  |     |   105 posts since 2020
Some are Clinically Insecure.
It should be called Louser Complex when "successful" is recognized in singular form only and...
"more" and "than" are seen where they are not.
"friend" was a figure of speech.
"little" represents the value I assign to this kind of act
SouthernGirl
  |     |   58 posts since 2022
IGR,
What???
IGR
  |     |   105 posts since 2020
Virtually nothing of substance!
It was not at all directed to you, SouthernGirl.
It was a lame rebuttal directed to individual(s) who is so frustrated with own inability to contribute any value that he/she is one post away from accusing us of conspiracy to commit wire and bank fraud.
Ignorance rules!
wm24
  |     |   7 posts since 2022
SouthernGirl,
I had GTE deposit all (except the accrued interest from this month) of the accrued interest from my GTE 60 month add-on CD into my GTE savings account. Member Care told me the current month's interest will be credited to my CD on November 16, 2022. My plan now is to have GTE transfer this month's CD interest to my savings account on November 16 (when it is credited to my CD). Then there will only be principal in my CD account. I will then ask GTE to transfer the remaining balance of my CD (which will only be principal) to my savings account. Then I will ACH transfer the entire balance of my savings account (the entire amount of principal and interest that was transferred to my savings account from my CD account) to my external bank account. If I proceed according to this plan, should I be able to transfer the entire balance that had been in my CD account to my external bank account without incurring any early withdrawal penalty? Thank you very much, WM24
SouthernGirl
  |     |   58 posts since 2022
wm24,
Yes. After receiving all of the interest that is due to you, then just confirm the closing withdrawal amount. If you agree, then close the cd and transfer the funds to your savings account.
wm24
  |     |   7 posts since 2022
SouthernGirl,
Thank you very much.
wm24
  |     |   7 posts since 2022
SouthernGirl,

Thank you very much, your advice worked great! Do you know of any other FIs that have the same set up as GTE? I have CDs at a great number of different FIs and would like to close those CDs in the same way and avoid EWPs. Thank you, again.
CDsuckers
  |     |   55 posts since 2022
Or, in your case, just Clinically Insane.
111
  |     |   259 posts since 2019
Ya' know - in the old days (well, literally just several months ago, so who am I kidding) - many users of DA.com expressed overtly political viewpoints on this website (gasp!). I know, it's hard to believe. Perhaps yours truly was even occasionally one of the progenitors, although by today's lights that seems just so unlikely, and benign to boot.

But currently, other kinds of disputes seem to have taken preference. Who's to say which bucket of disputes is preferable?

BTW, I'd really like to find out what in the world “Louser Complex” means (a couple of posts above). Does it mean that I should run out and buy huge quantities of this -
https://collection.sciencemuseumgroup.org.uk/objects/co148046/insecticide-powder-for-delousing-united-states-1939-1945-insecticide ?

Not to mention the phrase “Clinically Insecure” (same post, Caps Noted!!). Surprisingly, I didn't find it listed in MedLine as a recognized disease - how can that be?

Just askin'. (And laughin'.)
Coreyfr
  |     |   6 posts since 2020
Any recent datapoints on how the early withdrawal penalty is being applied?
IGR
  |     |   105 posts since 2020
Before I'll leave for good this madness I started myself, and let Lousers and Suckers( as lou and CD) to find next target for the same reason,
I'd like to summarize datapoints for those who actually care...
as a reminder, we are all aware that GTE 60 Months Add-On CD had troubled history...
never less, it's carried significant chunk of my savings through Dark Ages of near 0% rates, until recently( when as per design of long term it deposits) it began to turn into zero-sum proposition in relative terms.
In absolute term GTE created an opportunity to achieve infinite gain, but that is specific to my case inappropriate for general discussion.
As generally relevant datapoints these are what was learnt.

Early CLOSURE Penalty is being applied as a sum of last 6 months of the interest paid - "it is last 6 months of accrued interest".
It is wrong and inconsistent with GTE Disclosures for the reasons I'd rather avoid.
Instead of having academic discussions or arguing with GTE how EWP must be applied - "I am letting you know the exact amount we would take from the account in the event it is closed", "I am informing you of the exact penalty our system generates if you were to withdraw all the funds right now", "I am referring to an early closeout of the account"...
a simple workaround is available - DO NOT CLOSE ACCOUNT.
It seems that GTE system is not setup, for the reasons I don't care to learn nor discuss, to perform ACTUAL calculation when PARTIAL Early withdrawal is processed, "Yes we allow partial withdrawal, penalty is applied appropriately based on how much is withdrawn".
Just make sure that you don't go below minimum balance($500 I think).
For the simplify of transaction, it is advisable to withdraw posted Interest first.
The withdrawal of the interest processed penalty free and no questions asked, "You are wanting to withdraw all of that and move it correct?", "that is now done for you".
Do NOT worry about accrued Interest not yet deposited, you'll get it next statement cycle.
when after Interest was moved I inquired - "Ok, how much it would cost me to get another $XXX,XXX.XX out of xxxx?
The response came before I finished typing my instructions("Sorry, let me clarify. I need additional $XXX.XXX.XX moved from xxxx to xxxx, - "I have moved that for you, it didnt charge any additiunal fee".
As a disclosure, I still have significant amount of funds on the Deposit to cover all past and future EWP.
I will test my assertions and will follow up with GTE next month, when next Interest is deposited I will request another Early distribution of 2x$XXX.XXX.XX.
P.S. Anybody may use this information at their discretion, I am perfectly fine if that will alarm GTE, GTE implements the fix an I along other Lousers will pay the Penalty. Suckers stand to loose nothing since they have nothing invested in this.
I'd rather be called names but sleep well.
done and gone.
lou
  |     |   907 posts since 2010
Good Riddance.
IGR
  |     |   105 posts since 2020
it seems the GTE has difficult time coping with funds outflow...paying the price for the past success.
I have received several message from different level of GTE hierarchy pitch some sort of "deposit incentives".
Anybody else?


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