Disclosure of the Early-withdrawal Penalty

The disclosure of early-withdrawal penalties is now largely governed by the Truth-in-Savings Act and its implementing regulations (Regulation DD, which applies to banks and savings associations, and Part 707, which applies to credit unions).

The Truth-in-Savings regulations generally require three items to be included in the initial account disclosure: (1) a statement that a penalty will or may be imposed for early withdrawal, (2) an explanation of how the penalty is calculated, and (3) the conditions for assessing the penalty. [12 CFR 230.4(b)(6)(ii)] For more details, we refer you to our chapter on initial Truth-in-Savings disclosures in the first part of this manual.