Penalty for early withdrawal

[UncleHoney]

You know the old song and dance about a "substantial penalty for early withdrawal of funds from a CD. Well I found out this morning it ain't necessarily so. I had a CD mature the end of April and the best rate my credit union was offering at the time was 3.95%

This morning I check the rates and they had jumped to 4.80% in the last few days So I start reading the fine print about how much it's going to cost me to get out of the low rate and move up. I figured according to the rules it would cost me a quarters interest at the most. Even at that I would make it back within a year with the higher rate.

So off I go to the credit union ready to do the swap and take my lumps. When I asked what the damages would be, the teller did a few mouse clicks and said, There is no penalty, this is considered a rollover from CD to CD, not a withdrawal.

A few mouse clicks later she opened a new CD and I had the higher rate.

Not sure if this is common practice at many banks or credit unions but it sure is worth asking.

 

[Achiever51]

Yup, just did the same thing at my bank and thought it would incur a qtr's interest. The teller used the exact words "that's a rollover from CD to CD, not a withdrawal."

I guess the banks don't want us taking our money elsewhere??

 

[FinanceDude]

Yup, just did the same thing at my bank and thought it would incur a qtr's interest. The teller used the exact words "that's a rollover from CD to CD, not a withdrawal."

I guess the banks don't want us taking our money elsewhere??

It's amazing what financial institutions are doing now since they've been taken out to the woodshed in the subprime melt-down.....so much nicer than before............

 

[bbbamI]

This is interesting. I didn't think my bank would do that since a long term cd of mine has "one bump".

I'll have to check this out.....thanks!

 

[Rustic23]

Darn!
I thought this was another UncleHoney sex post!

 

[UncleHoney]

Darn!
I thought this was another UncleHoney sex post!

Ya never know what you're going to find inside these posts.

 

[Helena]

I had a small Roth IRA CD come due last month and
renewed it at a low rate... I called the bank today
and the rates had doubled. When I asked them if
I could roll it over to the new rate [same term]
they said the penalty would be $189 !

I will try calling the corporate office tomorrow.
I have another IRA CD coming due next month.
If they mess with me, I will withdraw both.


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[Helena]

Ok, I called the corporate office of the bank
and they are doing an "exception" in my behalf.

Thanks UncleHoney for the heads up...
you saved me $$.


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