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Bank 5 Connect Dope Slap

Kaight
  |     |   1,192 posts since 2011

When Ken posted the deal last summer, I opened one of the Bank 5 connect two year add-on CDs. Ken wrote:

"As stated in the Fee Schedule the Early Withdrawal Penalty reads as follows:

There is an early withdrawal penalty equal to 3 months of interest for CDs with terms less than one year, and an early withdrawal penalty equal to 6 months of interest for CDs with terms of one year or greater."

And Ken is seldom if ever wrong. He is careful.

So I was surprised today when I inquired about early closure of my CD. There is a six month interest penalty all right, just as Ken had stated. However, they politely informed me there would also be a $30 early closure FEE.

I recall no such fee when I opened the account, and my guess is the fee is a recent addition to the account terms and conditions. Such a fee makes closure of the CD uneconomical, as I suspect is the goal of the rascals at Bank 5 Connect. But regardless it appears they got me!

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txFish1
  |     |   479 posts since 2023
I am a member of 3 Credit Unions that I have a few CDs at and have noticed in the past few months that 2 of them have added OR raised the amount of a few fees in their terms and conditions. I have also noticed 2 of them now require you to punch in either your account number or social security number before you can even talk to a CSR! I am not a fan of this policy at all
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GH1
  |     |   1,058 posts since 2017
Really I did not know that either. When I opened CD they were very strange. I will close mine when due and never deal with them again
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RickZ
  |     |   218 posts since 2010
Kaight, I went through the same thing with Bank5 Connect a couple months ago. In my opinion they are clearing trying to hide the $30 fee. They make no mention of the fee in the CD section disclosure on early withdrawal penalties. Instead they disclose the $30 fee in the general fee schedule along with a separate fee listing about the early withdrawal penalty. If they feel that both penalties need to be disclosed in the Fee Schedule then how can they justify not disclosing the $30 fee in the primary CD section disclosure.

Section 1030.3 (a) of the Truth in Savings Act (Regulation DD) provides as follows: “Depository institutions shall make the disclosures required by §§ 1030.4 through 1030.6 of this part, as applicable, clearly and conspicuously, in writing, and in a form the consumer may keep.” As an attorney, I would argue that the $30 fee disclosure is not “clearly and conspicuously” disclosed (and is, in fact, disclosed deceptively) since it is not in the CD section where a consumer would most expect it to be. I'm not going to pursue this because even without the $30 fee the gain in closing a $500 CD after the EWP is only around $20, but as an attorney I think that there's a reasonable chance that the Consumer Financial Protection Bureau would agree with this position. If you decide to file a complaint, please update us on the CFPB’s decision.
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CDmanFL
  |     |   286 posts since 2019
I’m not a fan of Bank5. And their 2 year add-on CD at 3.25% is laughably weak and clearly uncompetitive. If they raise it about 1%, maybe I would reconsider opening an account just for rate insurance purposes, despite my prior experience of poor and unknowledgeable customer service.
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MAKNYC
  |     |   324 posts since 2015
Interesting. I don’t bank with them, but such a fee assessment is unusual…actually unheard of in my experience. Curious….is this fee for closing any deposit account within a specific time frame, or is it specific to the CD account? I have seen banks assess such a fee for closure of a savings/checking account within a stipulated time period, but never a CD which already have relatively onerous EWP fees.
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Kaight
  |     |   1,192 posts since 2011
Agreed. I as well have seen fees for early account closure . . . . 30 days, maybe even 60 or 90 days. But my account was opened last fall.

From what I could gather speaking with Bank 5, their $30 fee is right across the board, regardless when the account was opened and regardless how long the account had been open. You want to close a Bank 5 CD? They want their thirty bucks.

This charge smells of scam.  No person, not even Ken, with banking experience is gonna see this charge coming.  And Bank 5 is well aware of that.  The larger problem:

You don't know, it's impossible to know, what other hidden scams lie in wait from an outfit like this.  Any bank capable of such a cutesy $30 fee is clearly equally capable of other such shenanigans.  Once my CD matures I will be gone from Bank 5 Connect for good.  The management there could give Sean Jelen a run for his money!
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alan1
  |     |   880 posts since 2015
(I do not know anything about the disclosures and fee schedule at the time Kaight opened a CD nor do I know what documents Kaight reviewed when opening the CD, or at any subsequent point.)

The following material was accessed from the bank's website on July 9, 2023:

from the bank's "General Disclosures and Agreement: Understand your banking relationship with us."

"Transaction Limits and Fees"
[snip]
"CD Closeout Fee (Prior to CD maturity date) $30.00

"Certificate of Deposit Early Withdrawal Penalty There is an early withdrawal penalty equal to 3 months of interest for CDs with terms less than one year, and an early withdrawal penalty equal to 6 months of interest for CDs with terms of one year or greater"

https://www.bank5connect.com/terms-legal/disclosures/general-disclosures

Identical language can be found in the bank's "Fee Schedule".
https://www.bank5connect.com/terms-legal/fees

I find it useful to review all disclosures (not merely a truth-in-savings statement or similar document) before opening an account. This is particularly important when opening IRA accounts where the entirety of the terms and conditions is usually contained in multiple documents. And, for accounts at credit unions, there are often separate membership agreement documents that should be reviewed, in addition to disclosure statements,

It would be nice if all financial institutions placed such information in one document (though that would make IRA agreements even longer than they generally are, and perhaps fewer people would read them in their entirety). And, yes, depositors who do not review relevant documents can be taken by surprise.

At this time, I do not regard Bank5 Connect's early closure fee as "hidden". Was it "hidden" when Kaight opened his account? I don't know.
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