Fee for early termination of term deposits

Term deposits tend to allow early termination by the customer in exchange for a fee, entirely at the bank’s discretion. A penalty in the form of a percentage of the interest rate may also be agreed instead of a fee.

In the case of

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, where the return is linked to the performance of a certain index, the value of a basket of shares, or even to the occurrence or non-occurrence of a future event, the bank will probably not allow early termination and, if it does allow it, it will be under very different conditions to those of traditional deposits. With regard to such deposits, Ministerial Order EHA/2899/2011 of 28 October establishes specific information obligations, that are different to the obligations relating to ordinary term deposits.

What requirements must be met in order to charge this fee?

• The fees charged by banks are unrestricted, except in cases where they are limited by law. In the case of early termination of a traditional term deposit, the limit of this fee is the maximum of the interest accrued from the arrangement of the deposit until the termination date.
• In order to be able to apply a fee or penalty to a term deposit, this must be provided for in the contract.