CD Renewal Rate Disclosures

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Question:

I have a question about a CD special. The bank's rate sheet lists a 12-month CD as well as a 12-month CD Special that has a considerably higher interest rate/APY than the regular base CD. The bank also allows negotiation and will pay a higher rate to keep business. For the "special" and any other negotiated rate, the rate is only in effect for the initial term and at maturity will renew at the 12-month non-special rate. I'm looking at 1030.5; Comment 5(a)(1)-1 and I am thinking that advance notice would be required since the terms are changing upon the occurrence of an event (renewal). There is nothing on the TIS disclosing that the initial term is a promotional period and that the CD will renew at the lower non-special rate in effect. Am I thinking about this correctly?

Answer:

There is no requirement to mention the promotional rate. The APY is the APY. at account opening. The new APY for the renewal will be disclosed to the depositor at least 30 days prior to renewal per 1030.5(b)(2) and they will stay, or they will leave.