Monday, August 20, 2007

How to Close a CD

I dropped into the bank (I bank at Bank of America) on Friday to ask about making sure my CD doesn't roll over into a new CD (the interest rate is a measly 3.21%). I'd received a notification from my bank that my CD was about to mature, but its instructions on how to proceed had been pretty vague. So I stopped into a branch to check it out.

Apparently, the deal is like so: you have to wait until the CD matures, and then you have a window of seven days to close the CD, or it will roll over automatically. Frankly, one would think that in this Age of Computing Machines and Interwebs you could specify your preference in advance or address the issue online, but apparently not. Or at least not at Bank of America. So I'll have to stop in again between tomorrow and a week from tomorrow to tell them, "I want to close my CD." They'll close it just like a normal bank account and transfer the money into my checking account.

From there, I'll move it to my ING account, where the interest rate is more than a full point higher.

21 comments:

E.C. said...

It was the same basic procedure at my bank, except that there was a two week window to go tell them to put it in my checking rather than rolling it into a new cd. If I'd been willing to tie up the money for 13 months, I could have gotten a slightly better rate than my online savings, but not enough to make up for the loss of liquidity.

Patrick said...

Of course they do it that way. It forces you to make the move and increases the likelihood that they will have the money tied up for another year - which gives them a larger amount of money to lend from. As much money as you may make from a CD, the bank always makes more.

But, I agree with you. I don't like it either!

Strange Bird said...

Same procedure everywhere, even my online bank. That's the only way they can ever get people to stay in a silly CD--hope they forget to pull their money out! ;)

hazygrey said...

I think when I had my ING online CD, it let you specify in advance that you didn't want to roll it over.

mapgirl said...

Weird. All I had to do with my brick and mortar bank was call them up and they issued me a check that I went to pick up. They offered to mail it to me, but I just took it from one bank to another to redeposit the money the same day at lunchtime.

Anonymous said...

love your blog! I need to do this, too.

Anonymous said...

I just found your blog through a link--its very interesting...
I just went thought this w/bank of america in nyc...they actually can't help you in the branch. there is a number you need to call to actually do anything with the CD. if you call the main bank of america help line, they can connect you...please don't make the mistake I did, of wasting 20 min waiting to speak to someone at the bricks and mortar branch, who told me to call the centralized phone number...

Dootz said...

I had a Chase CD once where it rolled over into the same rate. Not bad if I didn't want to think about it.

I opened an ING account recently, though, for savings. It rocks.

SavingDiva said...

I've never had a CD, but I'm considering opening one for my down payment savings account (so I won't be tempted to spend it). However, with all of this hassle, it might just be easier to leave it in a regular savings account.

Mindy said...

I'm not sure if you've given more info on ING or not (I'm new to your blog.....just today, as a matter of fact) and am interested on what you think of them. I've been hearing a lot of good things about the company and one of my part-time jobs automatically put some money in some sort of investment account. The job is with the local university and, typically, they gave me no information on the company.

Mindy said...

Oops....I did want to say one other thing: about CDs.

You can still take advantage of the higher rates for longer periods of investment with some flexibility in getting your money back, but it takes money to do it. You start with creating one CD with the minimum and with a particular maturation date (the longest you can stand). While that's going on, you save money (the minimum) and open another CD. Keep on doing that and then the maturation dates overlap (perhaps one every other month or quarterly), the money keeps on growing, and you can have access to the funds relatively soon. Using CD funds is supposed to be for serious emergencies only. For those on-the-spot emergencies, that's what the E-Fund is for.

Mindy said...

Geez.....I notice I left something important off of my last post....again.

The E-Fund (when you have enough money to do so) should be parked in a money market fund so it can earn you the best interest rate. The rates for regular savings accounts at banks really stink.

Anonymous said...

Very off topic - but I'm wondering if you have any tips on budgeting with a partner. It sounds like you live with your partner, and I'm wondering how that works out in terms of budgeting for rent, groceries, shared bills, etc. As well, how do you chart that sort of thing on the budget software that you use? I'm having a hard time figuring out the best way to handle it. All accounts are in my name, and my partner currently rights me a check each pay period for his half of all shared expenses. I'm interested in how other people do it, and track it.

Thanks!

Her Every Cent Counts said...

got to love BoA CDs. I had a CD with crappy interest that I planned to close. I got the same letter informing me that the CD was about to expire. I figured, hey, it'll expire and then I'll be able to go in whenever and move the funds. The worst of it will be that the cash will stop gaining interest until I find the motivation to go to the bank and put the funds elsewhere. By the time I made it to the bank I was informed, oops, it's too late to move the $7000 in my 18 month cd. It had been automatically rolled over to ANOTHER 18 month CD. Grr. I was upset about it but, whatever, I've learned my lesson. When the CD matures, I'm moving those funds out of a low-interest CD for good. The worst part is knowing that the interest I'm making on the CD is less than what I could be making on a liquid high-interest online savings account. How can banks keep doing this to their customers?

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