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Sharing a quick summary of an article from the WSJ -
Americans have poured more than $2T into CDs to lock in higher rates since the Fed began raising rates in 2022. When CDs mature, roughly half of them are automatically rolled into new bank-issued CDs and locked up again (according to data and consulting firm Curinos).
When the account is maturing, the bank is required to notify customers. If the CD will automatically roll into a new one, the bank must disclose in writing the date a new interest rate will be determined. But under current regulations, they don’t need to contact customers to tell them the new rate, only provide them with a phone number to call to get the information.
The article cites a few examples of customer's money being auto-rolled (and thus locked up after a 7-14 day grace period) in CDs that barely yield anything (e.g., going from a 4% CD to an auto-enrolled 0.05% CD).
I'd quickly cease doing business with any bank that attempted this "financial malpractice". I gather the moral of the story is that the best (and perhaps only) person that will absolutely look out for your financial best interests is you.
Americans have poured more than $2T into CDs to lock in higher rates since the Fed began raising rates in 2022. When CDs mature, roughly half of them are automatically rolled into new bank-issued CDs and locked up again (according to data and consulting firm Curinos).
When the account is maturing, the bank is required to notify customers. If the CD will automatically roll into a new one, the bank must disclose in writing the date a new interest rate will be determined. But under current regulations, they don’t need to contact customers to tell them the new rate, only provide them with a phone number to call to get the information.
The article cites a few examples of customer's money being auto-rolled (and thus locked up after a 7-14 day grace period) in CDs that barely yield anything (e.g., going from a 4% CD to an auto-enrolled 0.05% CD).
I'd quickly cease doing business with any bank that attempted this "financial malpractice". I gather the moral of the story is that the best (and perhaps only) person that will absolutely look out for your financial best interests is you.
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