I never used to give much thought to CD maturity notices.
I maintain an up-to-date computer file listing all my CDs, showing when they come due. I check it regularly.
So, does the official notice add anything to my store of knowledge?
Of course, the notice might inform me of special procedures involved in closing the CD, like mailing in some form.
I certainly need to know that if I’m disenchanted with the bank or its rates.
But, as a creation of the Truth in Savings Act, a maturity notice also provides important information to help me decide whether to renew.
If my CD has a maturity of more than one year and renews automatically, the institution must provide me the same disclosures about the terms and conditions of the renewed CD as it would for a newly opened CD.
(Abbreviated disclosures are permitted for automatically renewable CDs of shorter maturities.)
The notice must be mailed or delivered at least 30 days before maturity (or 20 days before the end of the grace period, if the grace period is at least five days).
I only focused on this requirement when Bank of Internet didn’t provide me the legally mandated heads-up for any of my five CDs maturing there in 2012.
The bank hasn’t yet explained this oversight.
Anyway, a maturity notice prods me to double-check my CD’s contractual terms, including not only the new maturity date and potential rate, but changes in compounding, interest payment frequency and disbursement options, and early withdrawal rights and penalties.
If there have been unfavorable changes, I can walk during the grace period.
Sometimes, notices helpfully point out these changes, like those I recently received from Salem Five Bank, which specifically noted that early withdrawal penalties have changed and will apply to my renewed CDs.
Official Truth in Savings interpretations, however, state that, for automatically renewing CDs of more than a year, “(i)nstitutions need not highlight terms that changed since the last account disclosures were provided.”
That means the notice can just recite key terms, which might call for further investigation to unearth significant modifications.
Moreover, you can still miss something.
This happened last September, when I checked out Ally Bank’s deposit contract the day before it posted an amendment asserting a theretofore unknown right to veto early withdrawals.
I extended my Ally CDs in blissful ignorance.
The law can’t protect me from everything, especially my own mistakes.