An association may issue savings accounts earning interest at different rates of return. The annual rate of return paid on a savings account may either be fixed at the time the account is issued or may vary on any basis specified at the time the account is accepted.
Savings OperationsInterest
Section § 7050
This law allows associations to offer savings accounts with different interest rates. The interest rate can be fixed when the account is opened or change based on conditions set when the account is created.
savings accounts interest rates fixed interest rate
Section § 7051
This law allows financial institutions, known as associations, to categorize savings accounts in various ways. They can sort accounts based on characteristics like the size of the account, how long the account has been active, how frequently money is added, or where the account originates from.
An association may classify its savings accounts on any basis including, but not limited to, character, amount, or duration of the account, regularity of additions, or location of origin of the account.
savings account classification financial institutions account characteristics
Section § 7052
Interest on most savings accounts is calculated based on the account balance at the start of the accounting period, plus any amounts added during that time. Withdrawals and amounts noticed for withdrawal are subtracted from the newest deposits for interest calculations. The interest rate depends on how long the money has been in the account, as detailed in a different section.
Except for accounts that are classified according to a specified contractual time or notice period, interest shall be based on the withdrawal value of each savings account at the beginning of the accounting period, plus additions made during the period (less amounts previously withdrawn and noticed for withdrawal, which for interest purposes shall be deducted from the latest previous additions) computed at the rate for the time the funds have been invested, determined as provided in Section 7053.
savings account interest withdrawal value interest calculation
Section § 7053
This law explains how the date of investment in a savings account is determined for calculating interest. Normally, the date is when the bank receives the money. However, banks can decide to count all deposits made by a specific day (like the 20th of the month) as if they were made on the first of that month for interest purposes. If the bank chooses this method, they must also decide how to handle deposits made after that day, either as if they're made on the first of the next month, or from the day they actually receive them. Exceptions to this can occur as per another section, 866.3.
(a)CA Financial Code § 7053(a) The date of investment in a savings account shall be the date of actual receipt by the association of the account or an addition to the account, except that if the association shall so determine, accounts in one or more classifications or additions received by the association on or before a date not later than the 20th day of the month (unless the day determined is not a business day, in which case it may be the next succeeding business day) shall receive interest as if invested on the first day of the month in which the payments were received.
(b)CA Financial Code § 7053(b) If the association makes a determination under subdivision (a) it also shall determine that payments received subsequent to that determination date shall either receive interest as if invested on the first day of the next succeeding month, or receive interest from the date of actual receipt by the association, except as provided by Section 866.3.
investment date savings account interest actual receipt
Section § 7054
This law section allows the board of directors of a financial institution to make decisions about certain aspects of savings accounts. They can decide not to pay interest on specific types of accounts where withdrawals can be made whenever the account holder wants. They can also set minimum balance requirements for accounts to earn interest. Additionally, they may decide the interest rate for savings accounts, as long as it complies with regulatory limits at the time the account is opened.
The board of directors, by resolution, may determine any of the following:
(a)CA Financial Code § 7054(a) That interest shall not be paid on designated types of savings accounts from which withdrawals may be made upon demand or by negotiable and transferable order or authorization.
(b)CA Financial Code § 7054(b) That an association may establish minimum balance requirements for savings accounts to be eligible for distribution of interest.
(c)CA Financial Code § 7054(c) That, subject to applicable maximum regulatory limitations, an association
may pay interest on a savings account at a rate or anticipated rate of return determined at the time that the account is accepted.
board of directors savings accounts interest payments
Section § 7055
This section states that the directors of an organization have the authority to decide how interest on different types of savings accounts is calculated. They also determine when this interest will be either paid out or credited to the account.
The directors shall determine the method of calculating the amount of any interest on any savings account classification as provided in this article and the time or times when the interest is to be paid or credited.
interest calculation savings account interest payment
