Has Anyone Experienced A CU Changing Terms And Conditions Of A Share Certificate Before Maturity

CDMD | Jan 14, 2025 | 142 posts since 2022

Changes include compounding method from quarterly to monthly, adjusting rate downward to accommodate to keep yield the same and date interest credited. Apy supposedly didn’t change. Came as an insert in statement zero notice. Effective in current month. While interest posting moved from first day after quarter end to last day with current month. In face value seems benign but now I’m getting 15 months interest in current year. Thereby accelerating tax implications of q4 2025 interest into 2025 instead of q4

‘25 being a 2026 event. Seems like a real issue and potential NCUA reg violation issue. Any thoughts on them being allowed to make this type of change during the existing life of Certificate? Allowed? One earlier day interest crediting will cost me thousands of dollars in unanticipated taxes. Uggh

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belko | Jan 15, 2025 | 168 posts since 2021

CDMD - I can think of a few, but only one where I know the details. However it may not be of much help.

During the rate hike cycle from 2017 - 2019, GTE FCU offered “promotional” long-term add-on CDs whereby a depositor could add-on unlimited funds to that CD. Perhaps they needed more funds at that time, or whatever. (I believe the APY on those CDs was 3.1%, but keep in mind, that rate hike cycle did not rise as high as the one just ended - or, maybe, has not ended. Who knows?) In any case I opened some.

You can see where this is going - when rates began to stall in late 2019, GTE had second thoughts.

Emailed to me on 10/02/19 -

Dear [belko] -
GTE Financial has updated the terms of its Add-On Certificates effective 9/29/2019. You can now utilize the add-on feature to deposit up to $6,000 per year, per certificate, for each year of the term. Your rate and term will remain the same.

Thank you for being a GTE Financial member.

If you have any questions regarding your account, reach out to Member Care at 1.813.871.2690 from 7am to 8pm, or you may reach us at gtefinancial.org/livechat

Then, they emailed to me on 10/03/19 -

Dear [belko] -

While the promotion is no longer being offered for new share certificates, GTE will continue to honor the terms of the share certificates that were opened by members during the applicable promotional period and allow for additional unlimited deposits.

If you have additional questions regarding your certificate, please reach out to Member Care at 1.813.871.2690 from 7am to 8pm. Thank you for being a GTE member and for trusting us with your deposit.

So - they backed off their reneging. But, most of us who had bought these CDs had the original T&C documents specifying the terms.

All this was well-documented at the time by DA.com users, on threads that became quite long. An interesting thing is that, based partly upon those posts, Ken Tumin wrote a letter to GTE in support of those of us who'd bought those CDs. And it took just 1 day for GTE to reverse policy.

Sadly, DA.com has no Ken Tumin these days, and it has significantly fewer members. Instead, it seems to have a bunch of VPN shysters posing as multiple users.

CDMD | Jan 15, 2025 | 142 posts since 2022

Thx to all for your input. I will hear what they have to say. They pitched this change as a good thing. In my mind they didn’t think through it well enough. Their one day acceleration give me limited if any value and in the transition year 15 mos interest into one tax year. I will certainly follow up with them tomorrow and apprise all of their thoughts.

racecar | Jan 15, 2025 | 628 posts since 2014

Yes there have been quite a few instances where a CU has changed the terms in the middle of a CD's term length. Unfortunately, there's usually wording buried in the "General Membership Agreement" language of most CUs that allow them to make changes as long as you're notified in advance (it sounds like you've been notified).

I realize it doesn't feel good when it happens (and hopefully you can work it out) but even though it screws with your tax year, at least in the end they are still paying you the same amount (though I know for you personally it screws with your finances).

Since you asked, some worse examples than what's hitting you:

--GTE stopped allowing people to add on to their Add-On CD. (Thankfully they changed their minds after enough people protested).

--Darby Bank: stopped allowing people to add on to their Add-On CD, though they said they'd be willing to work with people individually if they wanted to add on just occasionally. (They soon went bankrupt and had to be acquired by another bank via the FDIC).

--Tobyhanna/Valor CU: Also an Add-on CD, they didn't want people to add funds anymore, but instead of "stopping" it, they started charging a brand new "fee" that was the amount of the interest you would get from all new deposits for an entire year! The CD paid 3% so if you wanted to add on $5,000 say, you suddenly had to pay a new "fee" of 3% of that $5,000 to deposit it. Enough people complained so after a while they too went back to their original terms, but soon had to be taken over by PenFed.

--Ft Knox/Abound CU: famous for changing the terms of their CDs during the term. Changed (upped) the EWP of their CDs and stated it would be for existing CDs as well, regardless of the protests or complaints. They got so much bad publicity and press that they had to do a name change soon after ("Abound CU"). I'll certainly never do business with them.

--GTE once allowed people with IRA CDs to take out 20% of the CD's value each year early without penalty. Then all of a sudden that "20% perk" is gone and anything you take out early has a penalty. I just don't know if GTE grandfathered those who opened their CDs when the 20% perk was in the terms or not. Knowing fee-happy GTE, I'd assume not, but I don't know.

--There are at least 2 other CUs I know of that changed their EWP from 6 mos to 12 mos for certain length CDs, but I don't know if they grandfathered people or not either (ie, if they honored the terms that were in effect when the CD was opened). One of them was Andrews FCU, and I remember people posting here on DA about it, trying to see if they could get Andrews to honor the old terms, but I don't remember how it turned out. The other CU who I know also increased the penalties for their CDs, I don't know if they grandfathered people or not either. But most CUs have language saying they can change the terms of their accounts as long as notice is given beforehand. In Andrews FCU's case, I don't think anyone who already had the CDs even got notice.

Good luck, and let us know how it turns out.

cactus | Jan 15, 2025 | 28 posts since 2023

Many years ago, CEFCU retroactively changed EWP on existing CDs. (A weird outfit located in Illinois and California.)

IGR | Jan 16, 2025 | 584 posts since 2020

YOU HAVE AVOIDED MATERIAL DETAILS!!!
it seems that CU didn't change the Terms of the Certificate, it changed the Membership Agreement, as far as Accounting and Reporting... totally within CU Rights.
Tax implications for each Member isn't CU's concern. As a CU Member you can bring your grievances to the attention of Union's General or Special Meeting - read the Bylaw and State Business Law of how it needs to be done.Unless you gather specific number of Members supporting you cause, you'll be dismissed.
If you don't like the changes you can always terminate the Membership, I'd guess that CU WILL CLOSE ALL YOUR ACCOUNTS WITHOUT PENALIES.
You'll be paying less Taxes Next Year!

CDMD | Jan 16, 2025 | 142 posts since 2022

Your note intrigued me. Thank you for pointing out the obvious. I’ve revisited the letter and attachment sent. And in fact you are correct it’s a bigger issue… a membership and account agreement change. I was so focused on my particular account issue that I overlooked the bigger implication. Thanks for pointing out the obvious. I didn’t intentionally leave this out. Talking to them to evaluate my particular circumstances for the initial matter at hand for me. Thanks to all for your input support and suggestions.

IGR | Jan 16, 2025 | 584 posts since 2020

It is OK, it is educational.
the matter of life is that FI's, as independent businesses, owe nothing to individual Customers.
All they owe is general Compliance to Law and Regulations.
As it was mentioned above, when GTE tried to one-sidedly amend individual Certificate Contracts, Regulators swooped in and turned GTE up side down. it cost GTE more in concessions than if it would take a loss from honoring badly conceived original Contracts.
I didn't blame you, it was not intentional.
It isn't easy to interpret the context beyond individual concern.

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