Change Early Withdrawal Penalty By Mass Mailing

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Question:

Our CD (Bankers System copyright) has the language: <i>We may change any term of this agreement. Rules governing changes in interest rates have been provided. For other changes we will give you reasonable notice in writing or by any other method permitted by law. If any notice is necessary, you all agree that the notice will be sufficient if we mail it to the address listed on page one of this form. You must notify us of any change.</i> Does this allow us to change our early withdrawal penalty by a mass mailing to all of our CD customers with a 30-day notice of the change? Also, do we need to be specific by account or can we just provide a chart that shows all of the new penalties?

Answer:

Answer by Ken Golliher: No, it does not; the language in your agreement cannot supersede the requirements of federal law and I'm reasonably confident your vendor is aware of that. If you want to change early withdrawal penalties on a time deposit you may do it in conjunction with the process for sending a notice at the time of maturity, not before.

Answer:

Answer by Andy Zavoina: Ask yourself, what consideration is given to the consumer to compensate for the change? Can the consumer notify the bank that the penalty has been lowered? "None" and "no" are the easy answers and this is why we have the contract terms in effect. These are not terms that can be changed in mid-stream. As Ken noted, make your change at renewal.

First published on BankersOnline.com 4/22/13