Questions and Answers

We want to move some of our kids accounts into different types of accounts.  What kind of notice is required to do this?

If the account terms and conditions of the existing accounts are exactly the same as those of the new accounts, you could presumably do this without advance notice.  However, if the terms and conditions will change, you may need to provide advance notice to the accountholder. Regulation DD requires a 30 day advance notice of changes that adversely impact the accountholder.  12 CFR 230.5(a).  If the account has electronic transfer capability and the changes adversely impact the accountholder (e.g. an increase in ATM fees), you would need to provide notice pursuant to regulation E 21 days before the change may go into effect. 12 CFR 205.8(a).  And, if the change in account type involves a change in your funds availability policy that adversely impacts the accountholder, you would need to provide notice 30 days before the change pursuant to regulation CC.  With funds availability, a change in policy that benefits the accountholder would need to be provided within 30 days of the change. 12 CFR 229.18(e).

Also note that your state law may have deposit account change in terms notice provisions.  Finally, if any of these accounts were created under a Uniform Gift to Minors type of statute, you would need to have the account owners close that account and formally open a new account as the form of ownership would be changing.

In any event, even if you determine that a regulatory notice of the account change isn't mandated, it makes sense from a customer service standpoint to inform the account holder of the change and provide an updated set up disclosures.

(Posted: 05/17/2008)

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Learn more about complying with regs DD, CC and E with the Deposit Accounts Manual.

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