You are simply out of your depth and in deep denial. You deny, for example, my actual experience with this when you have none. Do you also deny the following from the NCUA:
This is from Part 707 of the NCUA Rules and Regulations:
¤707.5 Subsequent disclosures. (a) Change in terms – (1) Advance notice required. A credit union shall give advance notice to affected members of any change in a term required to be disclosed under ¤707.4(b), if the change may reduce the annual percentage yield or adversely affect the member. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.
(b) Notice before maturity for term share accounts longer than one month that renew automatically. For term share accounts with a maturity longer than one month that renew automatically at maturity, credit unions shall provide the disclosures described below before maturity. The disclosures shall be mailed or delivered at least 30 calendar days before maturity of the existing account. Alternatively, the disclosures may be mailed or delivered at least 20 calendar days before the end of the grace period on the existing account, provided a grace period of at least five calendar days is allowed.
Note, we are talking about term share accounts. “30 days” refers to a change of terms to an account that will automatically renew; if the new (renewed) account will have different terms than existing account, they need to inform you at least 30 days prior to the maturity/renewal date. A credit union can tell you the add-on term will be removed whenever they want, it won’t go into effect until the CD renews using these new terms.
The fact a couple banks got away with it does not make it a rule.
Neither the above citation from NCUA rules nor my own personal experiences, which were precisely in accord with those rules, will have impact on glitch99.
But I do want to take this opportunity once again to point out to others the exact wording of the rule, where it mentions 30 CALENDAR days. This is important, it has impacted me personally, and you need to bear it in mind should you ever receive a 30 day notice.
By the time the notice reaches you it will already be several days into your 30 day window. In addition, financial institutions try to take advantage of the calendar days aspect by offering notice prior to intervals when there are extended holidays, e.g., Thanksgiving.
The bottom line is, should this ever happen to you, move quickly. Thirty days sounds like a generous amount of time. But likely as not you will end up with much less opportunity to arrange your accounts than at first meets the eye.
ETA
To clarify a bit, mailed disclosures are specifically permitted. The NCUA rule says the 30 day clock commences to run on the DATE OF MAILING!
So your 30 day window is being eaten into by the USPS before you even receive the notice!
Again, 30 days might seem like a lot. Take it from me. It’s not. Been there done that. If you receive a notice, move out pronto!!
You are not this dense. You know the truth. For others:
The rules posted by Mr. glitch are for new accounts. The situation under discussion here is with regard to subsequent disclosure requirements when the financial institution wishes to change terms of an account already established.
This discourse reflects very poorly on you, glitch99. People could be harmed if they subscribe to your thinking. But you apparently are willing to let that happen rather than admit your error. Shame on you.
Look, I have more than met my responsibility here. I have shared my personal experience. I have shared the applicable rule. My conscience is clear. If you want to ignore my counsel and listen to glitch99, please feel free to do so and good luck. You’ll need it.
The credit union is permitted by the NCUA to terminate your add-on privilege provided they offer you written notice thirty days in advance of withdrawing the privilege.
They can change a bunch of other stuff, too, after giving thirty days of notice. But this really is about add-on certificates. And my own experiences, both of them, were with regard to rescission of the add-on feature only.
I have no experience with changes made to other account aspects, e.g., term, interest rate, EWP, and so forth.
But my experience regarding add-on privilege termination is solid.
Which goes back to what I initially said - if they can unilaterally change terms, they can just as easily change your 5 year CD to a 5 day CD, your 4% interest rate to a .04% rate, your “no penalty” CD to include a 1-year penalty. If you worry about the add-on feature, there are far bigger things to be worried about. Either it’s a set contract, or everything is subject to change.
Well, you’re not wrong about that in a theoretical sense. But I prefer to deal with reality.
Aside from past flaps, and they were HUGE, regarding rescission of add-on features I am unaware of other CD aspects having been changed. There might be an exception at (what used to be called) FCFU (Fort Knox). But you see:
I have never been an FCFU member and have no personal experience with whatever it was that happened there. I do know it was so bad that FCFU ended up changing their name!
But outside that one possible exception I’m unaware of any CU ever having changed essential aspects of their CD accounts . . . . . EXCEPT for the add-on privilege.
USCU did it. Valor did it. And most recently GTE tried to do it. But there was such a huge row that GTE withdrew their announcement.
Anyway for readers here, as a purely practical matter, add-on rescission is the only focus at this time. Because it already has happened, and because the NCUA approved, it can obviously happen once again.
And if it does you will have (in reality and as a practical matter) less than thirty days to get your accounts in order. For me, should I receive such a notice, it could mean closing other, shorter term, certificates early and moving funds as quickly as I’m able into the CD account where my add-on opportunity would soon be disappearing.
I wrote it that way because receipt of a 30 day notice is not by itself determinative. Other considerations exist, for example the financial health of the credit unions involved. You have to consider everything before making any sort of move.
Still though, receipt of a 30 day notice is a big deal. It’s for certain not a letter I’m hoping to receive.
I have to agree with shinobi in this back and forth with glitch99. The language cited by glitch outlines the process for notifying depositors when their CDs mature. The regulations are clear that changing the terms of an existing CD cannot be done without a 30-day notice.
In all my years buying CDs, the only changes I have seen banks or credit unions try to effectuate are eliminating add-on features and amending the EWPs for existing CDs. I don’t believe anyone has done the aforementioned without a 30-day notice, and for those that did we probably are talking about less than 4 credit unions in the entire country.
Financial institution ratings are important for CD owners. And that goes double for credit union ratings, especially now as the pandemic rages on.
Nevertheless the NCUA continues to dawdle. Their Q2 call report should have been released last week at the latest. That did not happen. I wonder if they will get it out today, or will we tomorrow officially venture into “two months late” territory. Not that it makes any significant difference. And the report is really only, at most, a week late.
Thing is, when we all finally are able to see the new CU ratings, they will be based on data which is two months old. There has to have been some additional deterioration since end of June, and to that we shall remain blind.
Bottom line, the clowns at the NCUA need to get their act together. I hope it happens today.
I find the GTE attempt interesting - probably more so than usual because I have an addon CD with them -.
I understand why they withdrew the announcement but I do not understand why they did not send 30-day letter if they are legally allowed to change terms unilaterally. I mean, they could have gone. Oops we need to give you 30 days notice but we’ll go through with this after that period.
Is it indicative that they changed their minds about doing it, that they were afraid to attract too many new funds (or possibly lose deposits already in), or that their legal team found that it’d be risky to proceed with the addon termination?
In any case, if a bank or CU did NOT give you 30-day notice, what is the way to challenge the decision legally? Could you sue them after the fact arguing that you’re rights were breached under the NCUA rules for announcing term changes?
In the two instances in my experience, neither financial institution sent out the required 30 day letter . . . at first. This was most likely because neither knew the rules.
The failure to follows NCUA rules resulted in complaints being filed there (including one from me) and, in the case of USCU, legal challenge. The situations were eventually resolved, in both instances, by earlier rescission of the add-on privilege first being revoked, followed immediately by a 30 day notice being given that the privilege would be gone thereafter. In essence, in both cases, once the NCUA became involved the 30 day rule was enforced. However, that did not happen instantly. It took the NCUA time to impose their enforcement action.
I suspect GTE also acted in haste without consulting the NCUA rules. There was of course a furor, as you would expect. Rather than be chastened by the NCUA, GTE decided to just forget the whole thing . . . . for now.
I just found odd that they did not re-implement that termination after learning of the NCUA notification requirement. I was expecting them to come back a month later with a proper notification of termination of the addon features of those two CDs say 35 days after the notice went out.
Maybe a case of trying to pull a fast one and after failing to slip it unnoticed, realizing the move was not worth it.
That certainly was a possibility. It remains a possibility even now regardless their statements to the contrary.
Agreed. From a customer relations standpoint, and also from a public relations standpoint in GTE’s hotly competitive Tampa market region, management could have taken the furor to heart and decided the whole thing was not, as you say, worth it . . . not a good direction to take their credit union; not a good look.
This VERY LATE release should trigger the “big three” evaluators of credit union financial health, Ken, Bauer, and Weiss, to move forward with their new CU ratings based on Q2 data.
Note this is ridiculously late. The new bank ratings, based on Q2 data, have been available for a couple of weeks!! The FDIC clearly was working while the NCUA slept. This is annoying for me personally because almost all of my money is on deposit with this or that credit union, and it is the CU ratings I need. Bank financial health ratings do not help me.
Anyway, the long delayed end of Q2 ratings will reveal to all of us impact of three full months of pandemic, April, May, and June. Such ratings are an important component of the decision matrix used to guide possible movement, whether voluntary or involuntary, of our CD funds.
