As if all their shenanigans weren’t enough already, the big banks are now visiting more hurt on CD holders who need to cash out early with punitive new fees.
A CD is a contractual agreement you enter into with a bank. Let’s say you buy a 5-year CD and something happens a year or two in. There’s a family emergency and you need the money. Historically, you forfeited the last 90 days interest, which used to be a severe penalty. But today, though, that’s nothing because interest rates are so puny.
So David Lazarus of The Los Angeles Times reports banks like Chase and Bank of America have come up with a new way to penalize their customers.
If you need to break the CD contract early, Chase has a $25 fee and they take 3% of the CD’s value to really stick it to you. Bank of America has a slightly different policy. They charge a $25 fee upfront, plus 1% of the amount withdrawn for CDs of 1-year term or shorter. That fee jumps up to 3% for CDs that are above the 1-year term.
Lazarus crunched the numbers and found that the Bank of America penalty increased by 1,700% on 1-year CDs and by 1,600% on 5-year CDs, when compared to the prior penalty that was in place.
If you choose to do business with a giant monster mega-bank, it’s not a matter of if they’ll treat you badly, but when.