cds

CD rate dispute teaches lesson

Don TaylorQuestionDear Dr. Don,
I was quoted 4 percent on a five-year CD for $200,000 from a bank. When I sent in the money, they changed the CD rate to 3 percent. I asked for a refund, as I was not willing to accept the lower rate.

The bank is charging me a $2,822 penalty for a total of three days invested. I found them online. It was a total scam as I was switched to different salespeople every time I called and was given a different answer each time. My wife and I are both seniors and disabled. We don't know what to do. I hope you can give me an answer.
-- Larry Livid

AnswerDear Larry,
With your permission, I discussed the account with a representative of the bank in question. The good news is the bank refunded the early withdrawal penalty you incurred when you closed the account after three days.

After reviewing the call tapes, the bank discovered the customer service representative didn't disclose that you'd have to request to close the account in writing within a set time period to avoid the early withdrawal penalty. The bank should have told you that a verbal request wasn't sufficient to close the account without penalty.

What about the change in the interest rate on the deposit? I spoke with a representative of the bank who told me a 4 percent annual percentage yield had not been offered since December 2008. It's not clear how you got the notion the bank was offering 4 percent when you went shopping for a CD in July 2010. However, the bank wasn't marketing a CD at that rate in July.

Your experience reinforces the idea that depositors need to know all the particulars about a CD investment -- including the interest rate, early withdrawal penalties and withdrawal requirements -- before funding the deposit.

Want to see the big (financial) picture? Get Bankrate's major financial stories of the week delivered to your inbox every Friday.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & Investing" or "money." Read more Dr. Don columns for additional personal finance advice.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

News alert Create a news alert for "CDs"

advertisement

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
1 Year CD 0.90%  0.01 0.89%
2 Year CD 1.03%  0.02 1.01%
5 Year CD 1.59% --0.00 1.59%
 
View Rates in your area Search
advertisement
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Partner Center
advertisement

Connect with us