First, we believe it is possible to raise a certificate of deposit (CD) early withdrawal penalty before the CD matures, provided that you comply with Regulation DD’s notification requirements (described below). However, we recommend checking your CD agreements to ensure that the terms of each agreement permit your institution to raise the early withdrawal penalties before a CD matures, and we also recommend considering your customer relationships and possible reputational risks before implementing the change.

As to the Regulation DD notification requirements, your institution will have to provide a change-in-terms notice, and we see no problem with providing the notice in a mass mailing to your customers. Regulation DD requires you to provide advance notice of any change in terms that will adversely affect your customers at least thirty calendar days before the change takes effect. 12 CFR 1030.5(a)(1). As stated in the Regulation DD staff commentary, the change-in-terms notice requirement “applies if the change becomes effective prior to the maturity of the existing time account.” Official Interpretations, 12 CFR 1030, Paragraph 5(b), Comment 5(i).

Along with a description of the change, the change-in-terms notice should specify the effective date of the change and should be “mailed or delivered” at least thirty calendar days before the effective date of the change. 12 CFR 1030.5(a)(1). There are few limitations on the form of the notice — it can be included on or with a periodic statement or other mailing. Official Interpretations, 12 CFR 1030, Paragraph 5(a), Comment 1.