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CFPB goes to bat for CD investor

By Sheyna Steiner · Bankrate.com
Tuesday, December 3, 2013
Posted: 5 pm ET

Arguing about capricious institutional policies is usually a losing proposition. But sometimes consumers can win when they argue against sneaky bank fees.

In a story published Monday on the Huffington Post, a consumer managed to turn the tables on unfair bank practices by going to the Consumer Financial Protection Bureau, or CFPB. It all began when blogger Mike Frenkel went to his mother's bank to close a certificate of deposit with a notarized letter of instruction from her.

Unfortunately, he was informed that the matured certificate of deposit had just been rolled into a new CD. The grace period expired on the previous day which happened to be a Sunday, capping a week of holidays. Nonetheless, the bank insisted that the grace period for withdrawing funds from a CD was based on calendar days. To get the funds now would mean incurring a penalty of nearly $1,000. Pretty steep penalty on a six-month CD, no matter what the CD rates are.

In a last ditch effort to get his 93-year-old mother's money out of the bank, Frenkel turned to the Consumer Financial Protection Bureau.

I expected one of those "We're sorry" replies from the CFPB. Instead, a mere four days after I had filed my complaint, I received a written apology from the bank, a waiver of all penalty fees and the promise to "escalate this matter for further policy review." I couldn't believe it. The CFPB crew had come to the rescue.

What do you think? On the one hand, rules are rules. You read them when you signed up. On the other hand, isn't it a little bit of a trick to have the last day of the grace period fall on a day the bank isn't open?

What do you think of banks automatically rolling maturing CDs into another CD? Convenient service or annoying grab for more deposits and fees?

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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

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