Topic: Certificates of Deposit (CDs)
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We have an auto renewing 24-month certificate of deposit (CD) initially purchased in 2007. The date of last contact we have was in 2018. However, the CD does not mature until June of 2023. Do we send the CD in this year, or do we wait until 2023? According to the date of last contact, we should send it in this year, but there would be a penalty or forfeiture of interest if we send it in this year.
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We recommend delaying the reporting of the CD until 2023, when it matures, as permitted under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). The Illinois RUUPA states that automatically renewable time deposits do not need to be reported and paid to the Treasurer when doing so would cause the owner to pay a…
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We would like to stop sending certificate of deposit (CD) interest notices for interest that is credited to a deposit account or back to the CD. Is this allowed?
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Yes, we believe you may stop sending CD interest notices when interest is credited to a deposit account or back to the CD. Although some banks provide interest notices as a courtesy, they are not required under Regulation DD. Under Regulation DD, customers are entitled to receive disclosures when an account is opened, on request,…
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In Illinois, is there a minimum interest rate that must be paid on certificates of deposit (CDs) that are purchased with public funds? We are aware that a minimum interest rate for CDs purchased with public funds exists in Iowa.
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No, we are not aware of a minimum interest rate that must be paid on CDs purchased with public funds, but the answer may depend on an individual public agency’s investment policy and written agreement with your financial institution. The Illinois State Treasurer is required to “enter into deposit agreements with financial institutions specifying the…
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Can we set a flat fee as a penalty on a certificate of deposit (CD)? For example, for a CD that matures in fewer than twelve months, can we set a penalty as a certain number of months’ interest or a flat fee, whichever is higher?
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We believe that you may set a flat fee as an early withdrawal penalty on a CD, provided that the fee is properly disclosed under Regulation DD. Regulation DD’s Official Interpretations state that “Monetary penalties, such as ‘$10.00’ or ‘seven days’ interest plus accrued but uncredited interest’” are examples of early withdrawal penalties that must…
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Are there any legal issues associated with increasing a certificate of deposit (CD)’s early withdrawal penalty rate at the time of renewal and on any new CDs? Could this be an unfair, deceptive, or abusive act or practice?
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As a general matter, we do not believe that there are specific legal problems with increasing the early withdrawal penalty rate for new CD agreements (including renewals of existing CDs and new CDs), provided that the increased early withdrawal penalty is properly disclosed under Regulation DD. To properly disclose an increased penalty, it must be…
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Regarding the unclaimed property rules for certificates of deposit (CDs), if we have not had contact with a customer for over three years, but the CD does not mature until next year or later, should it be escheated to the state?
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No, a CD should not be reported as unclaimed property until three years of inactivity have passed since the initial date of maturity for the CD. Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), a CD is considered abandoned “3 years after its initial date of maturity” or the date of the last…
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We have certificates of deposit (CDs) and demand deposit accounts (DDAs) that are considered “college saver accounts.” When would these accounts be considered abandoned and need to be transmitted to the state?
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Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), CDs and DDAs would be presumed abandoned three years after the later of the account’s maturity or the last indication of interest in the property by its apparent owner. The fact that accounts are characterized as “college saver accounts” does not affect the presumed abandonment…
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Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), we are not required to notify customers about abandoned cashier’s checks, money orders, or certificate of deposit interest checks with values below $50. If the payee on one of these types of checks has an active deposit account at our bank, may we credit the amount of the abandoned item to the deposit account, or must it escheat to the state?
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We do not believe that the Illinois RUUPA would allow a bank to credit amounts due under abandoned items to the customer’s deposit account in order to avoid remitting those items to the Treasurer, and we do not recommend this practice for the reasons discussed below. While you are correct in stating that you are…
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We are a state bank and are creating a pandemic disaster recovery guide for our retail department. Is it mandatory for us to make safe deposit box entry available, and must we provide mailed ten-day certificate of deposit (CD) renewal notices? Are there any guidelines for reducing our typical services to a minimum?
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Generally, your obligations to your safe deposit box customers will be dictated by the terms of your safe deposit box rental agreements, and Regulation DD dictates the disclosures you must provide to consumers with CD accounts. However, in the event of a viral pandemic, your bank’s ability to provide certain services or to comply with…