Can a bank raise the fees on an IRA CD after you have taken it out and before its maturity date?

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Can a bank raise the fees on an IRA CD after you have taken it out and before its maturity date?

I am 1 year into a 60 month IRA CD. Suddenly the bank informs me they are changing the terms of our contract and raising the fees collected from 10 per year to 30 per year. Given the small amount of the CD and the low interest being paid I am not sure but that my CD will come out smaller in 5 years than when it went in. The penalties for me breaking my side of the agreement (early with drawl) are substantial. Can they break their side with impunity?

Asked on June 2, 2011 under Business Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The issue is, is the bank breaking the agreement or unilaterally changing it, or is it taking advantage of some term or right it has in the agreement, even if that was a term in the "small print."

A contract is a contract; a party may not, without legal authority or the agreement/consent of the other party, modify it. However, the authority to modify it can sometimes be found in the agreement itself. Many times, an agreement will state that certain terms, such as interest rates, may be changed at will (or at least upon the happening of certain conditions); for example, that's why credit card interst rates can go up. Look to your agreement, and/or ask the bank  to point out to you the terms in the agreement which let it make this change.


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