if you increase the early withdraw penalties on time deposits, is it required to send a change in terms notice? Thanks.

It adversely effects the customer, so send it out.

It's usually not possible to change the withdrawal penalties on existing CD accounts, since they are part of the contract. However, you certainly can change the contract at renewal time. But the specific penalty provisions are not required to be disclosed under Reg. DD (just the fact that an early withdrawal penalty will/may be imposed).

My advice is to draft the revised contractual language and include it with the maturity notice you send prior to renewal, making sure you refer to it as effective as of the renewal date.

I'm going to revise somewhat my comments above. For the early withdrawal penalty, you must disclose that a penalty will or may be imposed, how it is calculated, and the conditions under which it will be imposed. That's pretty specific.

If increasing your early withdrawal penalty at maturity, that constitutes a change in terms that is adverse to the customer. You should provide a notice of this change (perhaps with the maturity notice) at least 30 days in advance of maturity. The only exception is for time accounts with maturities of one month or less.