• Pennsylvania regulations on CDs apply to all institutions that issue these instruments to the state's residents.sign pennsylvania road, washington dc image by pmphoto from Fotolia.com
  
  Pennsylvania regulations on bank CDs, or certificates of deposit, which the laws define as negotiable instruments under Section 3104 of the Uniform Commercial Code, ensure that state residents have the necessary information to make informed decisions about their investments. Federal Reserve Board policies and other federal regulation supersede state statutes governing certificates of deposit.
  
  

Insured and Uninsured CDs

• Pennsylvania residents may purchase insured or uninsured certificates of deposits. The law requires insurance coverage of insured certificates of deposit by the Federal Deposit Insurance Corporation, or FDIC, up to a maximum of $250,000. Credit union CDs are insured by the National Credit Union Administration. Investors who purchase uninsured CDs do not have the financial safeguards afforded by the FDIC. If the financial institution becomes insolvent, there is a high risk that the investor will not be able to recoup the money that was invested.
  
  Financial institutions issued certificates of deposits for a definite period. The purchaser has an obligation to leave the instrument on deposit until the maturity date. The financial institution applies interest during the investment period.
  
  

Place of Payment

• Section 3111 of the Pennsylvania state statutes requires the issuers of CDs to make the principal and accrued interest payable to the holder at the place or address as stated in the certificate of deposit. If the instrument does not contain an address, the law allows the maker or bank to make the required payment at its place of business.
  
  

Interest

• The Uniformed Commercial Code covers the payment of fixed or variable interest on certificates of deposits. The issuer may designate the interest on negotiable instruments such as CDs, as a fixed or variable rate of interest. The codes also allows financial institutions to allocate a specific amount of money as interest payment. Most institutions compute interest daily based on the account's daily balance. In some cases, the institution may calculate the interest using information not contained within the CD agreement.
  
  

Payable at Fixed Time

• The regulations, Statute 3108, requires payment of the certificate of deposits' principal and accumulated interest once the designated period has elapsed. This fixed duration, called the "maturity date," must be easily determined at the time the financial institution issues the certificate of deposit. In some cases, the holder may request acceleration of the payment. This may result in penalties for early withdrawal. Usually, the regulations prohibit the assessment of early withdrawal penalties in certain circumstances, such as the death of the owner.
  
  

Transfer of CDs

• Pennsylvania laws allow a person to transfer the rights to a certificate of deposit. The transfer gives the transferee the same rights as the original CD owner. Most financial institutions require written permission to recognize a transfer of the instrument.