Hold that CD rate!

Hands holding money in front of computer

I have this recurring nightmare.

I’ve applied for a 24-month, 10% APY online CD (I’m dreaming, remember).

On my computer the next day, I enter the trial deposit information required for ACH funding, click on “Submit,” and get a “Welcome” screen confirming my new 0.50% APY CD.

The bank lowered the posted CD rate overnight.

This is why I sometimes find applying for an online CD harrowing. Is my rate locked-in?

What if there’s some processing delay — for a ChexSystems report, funding account verification, a check’s arrival — and the advertised rate goes down? Fortunately, many bank websites indicate exactly when CD rates are fixed.

Bank of Internet says it reserves your rate for 10 business days after you apply. American Express Bank guarantees the application date rate for 30 days following account approval.

A few banks, like Wells Fargo, disclose the period during which a rate is expected to be in effect.

For applications by mail, some banks, like Salem Five, say they give you the rate as of the postmark date.

But sometimes websites are unclear, or silent. You have to rely on a customer service representative’s say-so.

For example, I have a Discover Bank email indicating that, if I use ACH funding, my rate is locked-in when I apply, but, if I fund by check or wire, and the CD rate drops before the funds arrive, I get the lower rate.

A Kaiser Federal CSR told me my CD rate isn’t set until my check materializes, although Kaiser will tear it up if, when sending it, I say I don’t want a lower rate.

The Truth in Savings Act provides some protection.

For online applications, the Fed’s Regulation DD requires a bank to disclose a CD’s rate before the account is “opened.”

But, if processing (like a driver’s license check) delays opening, the bank can send you an email after you apply disclosing a brand new rate.

And, with mail or phone applications, the bank has up to 10 business days after opening to send you the CD rate.

Maybe I’m being paranoid. Only twice has a bank actually lowered the rate on me (and, both times, I persuaded them to restore it). And I’m unaware of widespread bait-and-switch schemes.

But it would be nice if the law required all banks to disclose, on their websites, their policies on locking-in CD rates.

At least then I’d sleep better at night.

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