The default historically is that it rolls over to the same (or nearest) term. I don’t know why one would assume the highest available term. That could make a 3 mo CD 5 years depending on current rates. You normally have a 10 day grace period (but always check bank term) after it renews to change term or take it out of CD. It seems like finally it is becoming the norm to allow specification of the disposition of the CD at maturity when opening the CD (renew vs deposit to checking for example) whereas historically they made you wait until closer to the renewal date to specify renewal instructions which can be a gotcha like in this situation.I recently started helping a elderly friend with her banking. She received a letter from Truist Bank that her $199,000.00 cd rolled over on April 15, 2024 into a 7 month cd earning 0.01 percent annual percentage yield. Knowing that my personal bank just rolled over one of my cds at 5 % , I went to Truist Bank to get an explanation. Carrying my power of attorney documents, I asked why her cd paying paying 3 % rolled over a 0.01 % rate. I thought that banks would rollover cds to the highest rate available. The bank manager told me that it is the policy of Truist all cds are offered at promotional rates and must be requested by account holders before rollover. Since no request was made the cd was rolled over to the 0.01 rate. The manager offered to let me close the cd and pay a $25.00 penalty and rollover to a new cd paying 5 %. . I told him the $25.00 would not be paid and we would consider moving all my friends money to a new bank. He offered to reach out to his supervisor to see if Truist would waive the penalty. Am I correct that banks should rollover cds at the highest rate available?
I would have taken the 25 dollar offer and counted my lucky stars. There is generally a 3 to 6 mo interest penalty to break a standard CD. If you just wanted to move it to another term at same bank under circumstances they could have been nice and waved fee but that 25 offer was an attempt to be accommodating.
Statistics: Posted by upwind — Thu May 02, 2024 8:09 am — Replies 14 — Views 1053
