CIT Bank will be introducing a rate cap on RampUp and RampUp Plus CDs for accounts originating on or after June 1, 2015.
These CDs currently permit customers to increase the rate once during the term if the posted rate for the particular CD goes up. Right now, there’s no maximum bump-up.
In an email to customers, CIT states that, for RampUp and RampUp Plus CDs opened or renewed on or after June 1, “the increase to the APY will be limited to twice the amount of the initial APY, less 0.05%.”
CIT offers 1-year and 2-year RampUp Plus CDs, each with a minimum deposit of $25,000. Their current posted APYs are 1.20% and 1.35%, respectively.
In addition to the one-time step-up right, these CDs allow the customer to add to the deposit amount once during the term (which CIT can limit to $250,000).
CIT also offers 3-year and 4-year RampUp CDs. Both have a one-time rate step-up right but not a deposit add-on feature.
The minimum deposit for the 3-year CD is $25,000, and the 4-year CD is $50,000. The maximum deposit for each is $250,000.
Their current posted APYs are 1.45% and 1.82%, respectively.
The bank provides an example of what would happen under the new cap with a CD having an initial APY of 2.00%.
If the posted APY were to increase to 3.98%, the customer could only bump his or her APY to 3.95%. If the posted APY were to increase to 4.00% (or presumably higher), the customer’s new APY would similarly be limited to 3.95%.
CIT offers no explanation of why it’s imposing the rate cap at this time.
Perhaps it expects CD rates to increase more sharply in the future than many of us do and wants to protect itself.
Whatever the reason, however, it’s CIT’s product to do with as it wishes, and since the caps don’t apply to outstanding CDs, it’s not changing any rules retroactively.