Beware of CDs that continue to auto-renew after death at Citibank

C

cityfuwa

New Member
I have had a terrible experience with Citibank regarding CD's my mother opened with them that people should know
about. This is a little known situation, but Citibank will continue auto-renewing CDs of an account holder,
even beyond death.

My mother was hospitalized on a ventilator, and too frail to go to a Citibank branch to renew her CDs
or bank by phone. So she opened the CDs online, which did not allow specifying beneficiaries. These
CDs auto-renew by default.

To make a long story short, my mother passed away. Although the savings account that
funded those CDs had beneficiaries specified (TOD), those CDs did not. My mother had thought
those CDs would simply mature and the funds would go back to the savings account.

Instead, Citibank has continued to auto-renew those CDs into infinity, refusing to allow them to
mature and return to the savings account with beneficiaries specified.

I cannot believe this is legal. I have written to Citibank but they refuse to cooperate.
The result is that my family will be out over $23,000 of legal fees to put these CD's through
probate because Citibank refuses to let these CDs mature. On top of all this, for 9 months
prior to my mother's death, Citibank refused to make any accommodation to enable her to do her
banking normally.

This bank is costing my family thousands of dollars in unnecessary legal costs due to all of its
actions. Dealing with them is basically impossible. There was no "personal" banking there, even
as private banking clients. They operate by cookie-cutter rules, and no one at the branch level even
knows what to do in a situation like this.
 

My bank is Truist (that's the name). I bought two CDs awhile back. They disclosed up front when they would expire and notified me a week or two before the actually did. If you just let it ride, it renews and the lowest rate possible, somewhere around 1%. You can call them and tell them you want it to renew and the current rate, otherwise you just lose a bunch of earnings, which seems really weird. It seemed like a way to catch customers off guard. I'm sure the bank will tell you there is a reasonable explanation for the way they do it. But I think it's more about keeping your money with paying you for it.

When they expire you need to cash it out right away. There's a grace period of about a week to cash it or call to renew at the fair rate. If you wait too long to cash it out, you will face early withdrawal penalties.
 
I moved my cash to a money market account. These don't promise a set rate long term, but react to the daily rate, but the monthly accumulation seems to be a half percent to a full percent higher than the current CD rates.
 

JustDave said:
My bank is Truist (that's the name). I bought two CDs awhile back. They disclosed up front when they would expire and notified me a week or two before the actually did. If you just let it ride, it renews and the lowest rate possible, somewhere around 1%. You can call them and tell them you want it to renew and the current rate, otherwise you just lose a bunch of earnings, which seems really weird. It seemed like a way to catch customers off guard. I'm sure the bank will tell you there is a reasonable explanation for the way they do it. But I think it's more about keeping your money with paying you for it.

When they expire you need to cash it out right away. There's a grace period of about a week to cash it or call to renew at the fair rate. If you wait too long to cash it out, you will face early withdrawal penalties.
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This. I do believe this is how most, if not all, banks handle maturing CDs.
The whole thing could have been avoided, as you get enough advance warning PLUS a grace period after maturing.
NOT the bank's fault...
 
It sounds like this is on your mom and not on Citibank.

It seems like the executor of your mother’s estate or the named beneficiaries of the CD could provide a certified copy of her death certificate and quickly resolve the problem.

If there was no POD beneficiary named on the account and the amount is sufficient it may have to go through probate but that isn’t the bank’s fault.

Good luck!
 
JustDave said:
My bank is Truist (that's the name). I bought two CDs awhile back. They disclosed up front when they would expire and notified me a week or two before the actually did. If you just let it ride, it renews and the lowest rate possible, somewhere around 1%. You can call them and tell them you want it to renew and the current rate, otherwise you just lose a bunch of earnings, which seems really weird. It seemed like a way to catch customers off guard. I'm sure the bank will tell you there is a reasonable explanation for the way they do it. But I think it's more about keeping your money with paying you for it.

When they expire you need to cash it out right away. There's a grace period of about a week to cash it or call to renew at the fair rate. If you wait too long to cash it out, you will face early withdrawal penalties.
Click to expand...
Definitely. Bank of America and Citibank are both renewing 1 year CD's at about 0.05% when 1 month to 1 year US Treasury bills are yielding over 4%. Both have "promotional" rates that are given at a specific term when you sign up that drop off to near zero rates on auto-renewal. The problem with these two banks is that they try to make you go into a branch office to make any changes to an account, or open a CD. That's pretty difficult for a lot of seniors, not just ones in the ICU. It's definitely a scam that should not be legal, and hugely profitable for these banks.
 
Generally CDs have a window of 6-10 days to cash them out at maturity which has been set at opening before they auto renew. There is no auto transfer into a savings account. Of course you can cash them out any time with a penalty. Ours have a three months of interest penalty.
Unless you can visit a brick and mortar location it will take a bit of patience and appropriate documentation to close a CD in the name of a deceased. Death certificate, will, assignment of probate, photo id.
What are you spending thousands of dollars for legal services on?
 
JustDave said:
My bank is Truist (that's the name). I bought two CDs awhile back. They disclosed up front when they would expire and notified me a week or two before the actually did. If you just let it ride, it renews and the lowest rate possible, somewhere around 1%. You can call them and tell them you want it to renew and the current rate, otherwise you just lose a bunch of earnings, which seems really weird. It seemed like a way to catch customers off guard. I'm sure the bank will tell you there is a reasonable explanation for the way they do it. But I think it's more about keeping your money with paying you for it.

When they expire you need to cash it out right away. There's a grace period of about a week to cash it or call to renew at the fair rate. If you wait too long to cash it out, you will face early withdrawal penalties.
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Trust is the result of a merger of SunTrust and BB&T.
 
I would be the last person to come to the defense of a financial institution, but there's really nobody there that's paying any attention, their computer automated system is just churning along on its own. A call to customer service and a copy of the death certificate should resolve the situation.
 
Aunt Bea said:
It sounds like this is on your mom and not on Citibank.

It seems like the executor of your mother’s estate or the named beneficiaries of the CD could provide a certified copy of her death certificate and quickly resolve the problem.

If there was no POD beneficiary named on the account and the amount is sufficient it may have to go through probate but that isn’t the bank’s fault.

Good luck!
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I agree with the above. Whomever is the executor or had/has POA over moms affairs should be able to stop the automatic rollover. If no one was assigned those duties than probate will eventually give someone that power.

Keep in mind the CD will have to hit a maturity date before it can be dealt with, I don't believe it can be terminated mid cycle without penalty, even after the owners death.
 
My question would be if legally there was a direct connection between the account the monies originally were purchased from…or are they legally separate at this point. If legally separate…as I suspect they are…you would have to include them in an estate and divide as the estate directs or if no estate guidance go thru probate.
 
cityfuwa said:
Bank of America and Citibank are both renewing 1 year CD's at about 0.05% when 1 month to 1 year US Treasury bills are yielding over 4%.
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This is exactly why I never have and never will get a CD from a bank.
All of my funds are either in high interest savings accounts getting up to 4% interest or else invested in stocks.

Twostep said:
Wills normally go through probate or at least a determination of validity. A trust does not but it can be expensive and time consuming to set up.
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I prepared my own trusts many years ago by copying trusts from a library Nolo Book and an internet search,
typed my own trust using those as guidelines, had them signed, notarized, then recorded at the county recorder.
Then when my spouse passed away I redid my own trust, and am in the process of updating it by adding beneficiaries.

Trusts are not expensive, as long as you do them yourself.
It is not a requirement to pay an attorney a big fee to do something so simple.
 
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Twostep said:
Generally CDs have a window of 6-10 days to cash them out at maturity which has been set at opening before they auto renew. There is no auto transfer into a savings account. Of course you can cash them out any time with a penalty. Ours have a three months of interest penalty.
Unless you can visit a brick and mortar location it will take a bit of patience and appropriate documentation to close a CD in the name of a deceased. Death certificate, will, assignment of probate, photo id.
What are you spending thousands of dollars for legal services on?
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My CDs at Goldman Sachs online and CapitalOne360 always pay back to the account that funded them or a linked account on maturity. When opening the online CD at Citibank, there no was option to specify where the proceeds of the CD should be paid, along with no opportunity to specify beneficiaries, so the linked Citi savings account should have been the default. As an aside, not everyone will be comfortable with online banking, but Goldman Sachs (Marcus) and CapitalOne360 have always renewed my CDs at a competitive rate, unlike the money center banks like Citi and B of A.
 
Twostep said:
Generally CDs have a window of 6-10 days to cash them out at maturity which has been set at opening before they auto renew. There is no auto transfer into a savings account. Of course you can cash them out any time with a penalty. Ours have a three months of interest penalty.
Unless you can visit a brick and mortar location it will take a bit of patience and appropriate documentation to close a CD in the name of a deceased. Death certificate, will, assignment of probate, photo id.
What are you spending thousands of dollars for legal services on?
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California has statutory probate legal fees based on the amount of assets in question. It's not negotiable, there is no shopping around. It's apparently much higher than in other states.
 
Aunt Bea said:
It sounds like this is on your mom and not on Citibank.

It seems like the executor of your mother’s estate or the named beneficiaries of the CD could provide a certified copy of her death certificate and quickly resolve the problem.

If there was no POD beneficiary named on the account and the amount is sufficient it may have to go through probate but that isn’t the bank’s fault.

Good luck!
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My mom always specified POD on every account, except in this circumstance where she only had the option to leave the cash earning zero or open the CDs online while she was hospitalized. This is a warning to others not to make the same mistake. Citi has not broken any laws, but there are also not specific laws around auto-renewal of CDs when the account holder dies. I consulted some bank regulatory organizations and legal offices, and no one really knew. It seems obviously wrong to auto-renew anything after someone dies, but it's not currently against the law.
 
Muskrat said:
My question would be if legally there was a direct connection between the account the monies originally were purchased from…or are they legally separate at this point. If legally separate…as I suspect they are…you would have to include them in an estate and divide as the estate directs or if no estate guidance go thru probate.
Click to expand...
Two entities. Mom signed a contract with the bank.
Wills normally go through probate or at least a determination of validity. A trust does not but it can be expensive and time consuming to set up.
 
I had a CD that matured with Synchrony Bank. They offered a generous interest rate, and it was only a 9 month CD, pretty good deal. When the time for maturity was coming near, I notified them online that I wanted to terminate the CD when it matured, and wanted the money put into my savings account. They acknowledged, then when the time came, went right ahead and renewed the CD, exactly what I did not want.

I found that it was impossible to speak to anyone, because there is no "anyone" there. It's all done by pushing buttons on the phone, or via the internet. I finally found a way to break through and got an actual human being, and finally got them to do what I wanted. I removed my money from that bank, deposited it in a bank with an actual building that I can go into and meet with a flesh-and-flood person (nearer than 1000 miles away), and vowed never to use one of these A-I banks again.

This replacement of personnel with computers probably saves the banks millions of dollars, but is obviously not good for the customers. There are times when you just need to talk to a person.
 
The big banks are best avoided except for small accounts of little consequence. The fact that they would offer “HighYield“ CDs at 1.5% when we were in a 4-5% world is reason enough for me to avoid giving them much business.

I have checking account with one Big Bank simply because they are walking distance from my home. And I have many things setup to pay with their bill pay service for which they charge me zero. I write perhaps 6 checks a year on the account mostly to institutions that either don’t accept credit cards or do so but with a fee attached. So 6 checks a year and free bill pay make having an account with them worth it. But, if they hit me with fees, I am out of there faster than a chicken with the Colonel after it.
 
Sunny said:
I had a CD that matured with Synchrony Bank. They offered a generous interest rate, and it was only a 9 month CD, pretty good deal. When the time for maturity was coming near, I notified them online that I wanted to terminate the CD when it matured, and wanted the money put into my savings account. They acknowledged, then when the time came, went right ahead and renewed the CD, exactly what I did not want.

I found that it was impossible to speak to anyone, because there is no "anyone" there. It's all done by pushing buttons on the phone, or via the internet. I finally found a way to break through and got an actual human being, and finally got them to do what I wanted. I removed my money from that bank, deposited it in a bank with an actual building that I can go into and meet with a flesh-and-flood person (nearer than 1000 miles away), and vowed never to use one of these A-I banks again.

This replacement of personnel with computers probably saves the banks millions of dollars, but is obviously not good for the customers. There are times when you just need to talk to a person.
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I understand the sentiment. Sometimes it is helpful to have a person to talk to. It has always been easy for me to reach someone at Goldman Sachs online. One thing I learned from this experience was that there is no "personal" relationship at Citibank, even if you have a private banking account. All those bankers operate by some cookie-cutter rule book, like the army. When you come to an extraordinary situation like this, you'll be dealing with a person, but one who is incapable of dealing with something not in the manual, and good luck trying to reach someone higher up who might be able to even exercise some thought and explain a non-standard situation.
 
Always have a POD on CD’s and any other financial instruments.
A trust* on top of that which specifies the investments.
Lastly, current power of attorney documents.

* in my state it’s pretty low threshold for probate - $75k in PP and/or $100k RE.

These private bankers crack me up. They call once a month asking me “do you need anything?” I am tempted to say yes, bring me coffee and a bagel please. And hurry it up!
 
all investments need to have preparations for someone else to take the reigns

chase auto renews too

i had a cd mature friday … you have ten days to not let it renew .

i got both a snail mail letter and a few e-mails reminding me it was going to auto renew over the last month

when i saw it was auto renewing at 1.98% i went in yesterday and had it put in checking .

i did a transfer to fidelity today .

this is why it is so important that people who are alone keep or appoint others with power of attorney to do things for them .

there are all kinds of internet tales of woe where people either didn’t or couldn’t pay attention to their finances and then they or their families want to blame someone else instead of the fact their was poor preparation and control over the invested money on their end
 
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Mathjak, the key to your succcess was in the few words, "I went in yesterday and had it put in checking." That's exactly what is important with these situations. You have to be able to "go in" somewhere, and reach someone. I was lucky to be able to finally get out of mine, but it took a whole day on the phone. If my hair could get any grayer, it would be! Not worth it.
 
Sunny said:
Mathjak, the key to your succcess was in the few words, "I went in yesterday and had it put in checking." That's exactly what is important with these situations. You have to be able to "go in" somewhere, and reach someone. I was lucky to be able to finally get out of mine, but it took a whole day on the phone. If my hair could get any grayer, it would be! Not worth it.
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it also instructed me to call if i wanted to…since they are a block away i went in . but it could have been done by phone
 
I've never had a problem getting hold of somebody from a national or regional bank or a more local credit union. True, they don't put a big "Call Here To Chat" number listing prominently. But that's because of the abusers who refuse to lift a finger first for routine matters.
 

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