Are there penalties for early withdrawal under TISA?

The correct response identifies that penalties for early withdrawal must be disclosed under the Truth in Savings Act (TISA). TISA ensures that financial institutions are transparent about the terms and conditions associated with deposit accounts, including any penalties tied to early withdrawals. This regulation requires institutions to inform consumers about the potential financial consequences of withdrawing funds before a specified period, particularly for accounts like certificates of deposit (CDs) which typically have fixed terms.

The requirement for transparency helps consumers make informed decisions regarding their savings options, as they need to weigh the benefits of a higher interest rate against the risks of losing a portion of their interest earnings or principal if they withdraw funds prematurely. Such disclosures enhance consumer protection and encourage more responsible banking practices.

Therefore, it is critical that potential penalties and their implications are clearly communicated to consumers, aligning with TISA's objective of promoting full disclosure.