Minnesota-based US Bank has decided to screw its existing IRA CD customers hard.
Previously, one could open an IRA CD with no annual fee as long as the amount was 5k (the current annual max) or more. If you opened one with a lower principal amount, you paid a 10 dollar annual fee
A letter dated 5/10/2011 just went out indicating that the fees were changing more or less immediately to 30 dollars a year (a 300% increase) and the limit to waive the fee was raised to 25k. The letter includes an extremely helpful suggestion that one deposit more money at US Bank to avoid the fee
So I guess the greedy bankers at US Bank forgot that one can only deposit 5k a year into an IRA account. I guess they also forget that you cant deposit ANYTHING into a CD. Or maybe more accurately, they haven't forgotten - they ran a bait and switch scheme on a LOT of customers and will be collecting a ton of money via this fee.
When I called to ask how it was legal that they change terms on a existing CD (in my case, 2 years into a 5 year term) the helpful CSR indicated that the language inthe contract allowed them to raise the fee to any amount they desired at any time. I then asked why they just didn't raise the fee to 5k or 10k a year and take it all, and her reply was that they were permitted by the contract to do so.
So my choices
1) take a kick to the teeth and pay 30 dollars a year because even if I had the money to do so, i cant deposit more than 5k this year into an IRA and 5k more will not get me to the magical 25k tier, which could well like the carrot in front of the doneky change again before I get there
2) Take a much bigger kick in the teeth by withdrawing my money, paying the huge early withdrawal penalty (which this greedy bank then gets) AND then also pay the taxes on the money or pay their 100 dollar roll-to-another-bank fee
I could understand applying said fee changes to NEW accounts, and had they been in place when I was shopping for a IRA CD, I would have gone elsewhere
I do NOT understand applying said fee changes to existing accounts, particularly CDs that are locked in for years
I recommend everyone keep their money away from this thief-in-bank's-clothing
I recommend class action lawyers take a good look at this one - I would bet good money there are enough of us to form a valid class.