Banks can waive fees when a customer dies, but do they in Oklahoma?

Doug and Steve Welch were still grieving over the death of their mother this year when they hit a jarring roadblock while settling her affairs.

When they went into an Oklahoma Educators Credit Union branch in Duncan to close her certificate of deposit (CD) accounts, the credit union obliged. But they also charged the grieving family over $2,000 in penalties for early withdrawal.

“Expecting compassion and sympathy when the death certificate was surrendered, we were appalled as credit union personnel insisted on enforcing an early withdrawal penalty for certificates of deposit they had held more than two years,” the brothers wrote in a letter to The Oklahoman.

The Welch brothers discovered that not everybody was as inflexible as OECU when they went to three other financial institutions in Duncan where their mother also had assets.

“They all waived the penalties,” Doug said. “In other words, we were given checks in the amounts that included interest paid up until the day we withdrew the funds.”

The brothers asked OECU if they also would waive the early withdrawal penalty, but the credit union declined. Doug Welch later tried to appeal the decision with a regional operations manager at the institution he reached by phone.

“She was aware of the situation in in Duncan where those penalties were imposed, and said that headquarters knew about this,” Doug said, “and that that is the way they treat all customers.”

He said that response, seemingly that OECU doesn’t grant waivers for early withdrawal, was unacceptable and asked to meet with someone personally.

“They never scheduled that appointment. Never called me back,” Doug said.

It’s important to make clear that OECU was well within its rights to charge the brothers an early withdrawal penalty.

Certificates of deposit are fixed-term savings accounts that pay out a set amount of interest when the account matures. OECU offers CDs that mature between six months and five years. Therefore, financial institutions can charge a penalty if someone breaks the original agreement by withdrawing their money before the term ends.

But despite the alleged comment that OECU imposes the penalty on all customers, their own Truth-in-Savings Disclosure document says the credit union retains the option to pay out accounts before they mature, without imposing an early withdrawal penalty.

The document also lists reasons why they might waive a penalty: “When an account owner dies or is determined legally incompetent by a court or other body of competent jurisdiction.”

If you want to open a fixed-term savings account and have a concern about what happens to the account upon incapacitation or death, you should check with the financial institution before depositing your money. Each bank or credit union may have its own distinct policy about how to handle early withdrawals.

Public Eye reached out to OECU multiple times over several weeks to give them a chance to explain their decision, but the credit union’s leadership did not respond.

We would have asked if they indeed treat every customer the same by refusing all waivers, including those for deceased account holders, and whether they planned to meet with the Welch brothers as requested.

Until then, the family hopes to recover from the grieving process despite what they describe as callous treatment by OECU.

“We were just shocked when they took the stance they did,” said Doug.

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