|Posted:||May 5, 2020 03:37 PM|
|From:||Representative John T. Galloway|
|To:||All House members|
|Subject:||COVID-19 Waiving penalties for early withdrawal of certificates of deposit|
|For many hard-working Pennsylvanians, planning for their future involves putting money away for a rainy day. One of the more popular products offered by banks and credit unions that provides higher interest rates in exchange for leaving a lump-sum deposit untouched for a period of 6 months to 3 or more years, is a certificate of deposit, or CD. At the end of the term, sometimes referred to as the maturity date, the depositor can withdraw his or her funds penalty free, and with a few dollars in earned interest on top of the initial nest egg.
Interest rates for some top-paying CDs generally are higher than the best savings and money market accounts. In good economic times, when families can afford to tie up a few hundred or a few thousand dollars, CDs are a safer and more conservative way to invest their money, than entering the stock or bond market. However, these products come with early withdrawal penalties, if the consumer encounters an emergency that forces them to tap their rainy day savings.
The novel Coronavirus pandemic, has placed new financial burdens on responsible Pennsylvanians. For many families, the COVID-19 pandemic has become a rainy day, and they need to access their CDs now to put food on the table and keep a roof over their heads. In doing so, they risk paying penalties, which will whittle away at money they have in their nest egg.
I am offering a proposal that would ask financial institutions to do something that many already are, or have the ability to do – waive any penalties for early withdrawal of a CD.
My bill would make it a violation of the Unfair Trade Practices and Consumer Protection Law for a financial institution to charge a penalty for early withdrawal of CDs from the effective date of this act until 90 days after the COVID-19 disaster emergency declaration issued by the Governor, has expired.
I ask for your support in helping hard-working Pennsylvanians to be able to access the money that they worked so hard to save for a rainy day.
Introduced as HB2580