I am in California.
When another credit union acquired the assets of my credit union, it discontinued the flex-rate certificates of deposit with a statement to migrating members that “As of 10/31/08 the ‘flex-rate’ feature will be discontinued and the then current rate on the certificate will be honored until its maturity.”
Here is the mechanism that had always been used for adjusting the flex rate: “The dividend rate change will equal 50% of [the change in] the Commercial Prime Rate in effect on the last business day of the month prior to the change.” This meant that a rate change for, say, July would have been based on any change in the Commercial Prime Rate in June.
For the month of October 2008, including the last day of the month, my rate was 4.27%.
If the normal flex rate mechanism had continued, I would have had a different and lower rate for November because of a change in the Prime Rate in October. But that new rate would not have been effective until November 1, 2008.
The credit union changed the rate going forward, not giving me the rate earned on October 31, but the rate that would have been effective November 1 if the original mechanism had continued. They did not give me “the then current rate” I was earning on 10/31/08.
They interpret “then current rate” to mean the rate that they calculate on October 31 that would be applied in November if the flex-rate feature were not discontinued, but they have discontinued the flex-rate feature as of October 31.
I interpret “then current rate” to mean the rate I was earning on October 31.
If there is an ambiguity in the policy they created, they are interpreting it to their advantage, and they may have created the ambiguity with the intention of allowing them to use the existing rate if the rate would have risen or stayed the same, and to use a lower rate if (as happened) the Prime Rate fell.
Do I have a good change of winning in small claims court if I sue for the difference between what the CDs finally earned and what I would have earned if my rate had continued at 4.27%, arguing that the ambiguity in the policy ought to favor the customer? Is it likely that a small claims judge would see it that way?
When another credit union acquired the assets of my credit union, it discontinued the flex-rate certificates of deposit with a statement to migrating members that “As of 10/31/08 the ‘flex-rate’ feature will be discontinued and the then current rate on the certificate will be honored until its maturity.”
Here is the mechanism that had always been used for adjusting the flex rate: “The dividend rate change will equal 50% of [the change in] the Commercial Prime Rate in effect on the last business day of the month prior to the change.” This meant that a rate change for, say, July would have been based on any change in the Commercial Prime Rate in June.
For the month of October 2008, including the last day of the month, my rate was 4.27%.
If the normal flex rate mechanism had continued, I would have had a different and lower rate for November because of a change in the Prime Rate in October. But that new rate would not have been effective until November 1, 2008.
The credit union changed the rate going forward, not giving me the rate earned on October 31, but the rate that would have been effective November 1 if the original mechanism had continued. They did not give me “the then current rate” I was earning on 10/31/08.
They interpret “then current rate” to mean the rate that they calculate on October 31 that would be applied in November if the flex-rate feature were not discontinued, but they have discontinued the flex-rate feature as of October 31.
I interpret “then current rate” to mean the rate I was earning on October 31.
If there is an ambiguity in the policy they created, they are interpreting it to their advantage, and they may have created the ambiguity with the intention of allowing them to use the existing rate if the rate would have risen or stayed the same, and to use a lower rate if (as happened) the Prime Rate fell.
Do I have a good change of winning in small claims court if I sue for the difference between what the CDs finally earned and what I would have earned if my rate had continued at 4.27%, arguing that the ambiguity in the policy ought to favor the customer? Is it likely that a small claims judge would see it that way?