Q: I'm starting to question how my bank credits interest to my CDs. I started two CDs with the same bank at different times. For one I get a statement every month; for the other I have yet to see a statement. For the account where I get a statement, it says I am earning interest but the market value hasn't changed in the last two statements. At this point, I'm no longer concerned about earning the best CD rates -- I'm just trying to make sure I'm not getting ripped off. Am I being paranoid?
A: Being diligent about monitoring your accounts is different from being paranoid. Assuming this is a legitimate, registered bank -- something you can look up on the FDIC's website at fdic.gov -- there is almost certainly nothing nefarious going on. However, mistakes do happen, and in any case it is important to fully understand how your accounts are being handled and reported.
Here are a couple possible explanations for the inconsistencies or irregularities you are seeing:
1. Statements may be on different cycles or in different formats. Banks more and more are trying to reduce expenses by cutting back on paper statements. In particular for certificates of deposit, which are not transactions accounts that customers need regular access to, banks may have them on a quarterly or even annual statement cycle. It is even possible that statements for the newer account are issued online. Banks increasingly are offering better rates for online-based CD, money market and savings accounts -- vehicles that are serviced via the Internet -- and in signing you up for a better rate, the bank may have put you into an online CD account. The point is, with accounts opened at different times, it is entirely possible that they are on different statement cycles, or have statements issued in different formats.
2. Interest may be accrued monthly but posted less frequently. Again, in an effort to make account administration less expensive, banks may be only posting interest to the account on a quarterly or other basis. This should not matter in the long run, as long as interest is being accrued monthly and is fully posted by the time your CD matures.
Remember, these are just possible explanations. Have a conversation with your bank about these possibilities so you can find out for sure what the story is.
Finally, you mention no longer caring about getting the best CD rates, but there is no reason you should not have competitive CD rates plus account reporting that is clear and consistent. If you can't reach an understanding with your current bank about their reporting methods, you might want to make reporting a search criteria -- along with interest rates -- the next time you choose a bank.
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