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FDIC Consumer News - Summer 1998

Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Deposit Insurance After a Merger

What happens to your deposit insurance coverage if, because of a merger of two insured institutions, you end up with more than $100,000 in the resulting institution? Under the FDIC’s rules, you’re in no immediate risk of having funds over the insurance limit. In general, deposit accounts you had at the two institutions before the merger would continue to be separately insured for six months after the merger—and longer in the case of some certificates of deposit (CDs). This six-month grace period is to give you time to restructure your accounts so they stay within the $100,000 limit or to transfer some of the excess funds to another insured institution.

As for a CD account opened at one institution but assumed by another institution, it will continue to be separately insured until the earliest maturity date after the end of the six-month period. So, if you have a three-year CD of this type that matures two years after the merger, it continues to be separately insured for the remaining two years. But let’s say you have such a CD that matures during the first six months after the merger. If you renew the CD for the same term and the same dollar amount (with or without accrued interest), it will continue to be separately insured until the first maturity date after the six-month grace period. But if you renew the CD for a different term or dollar amount, it will be separately insured only until the end of the six-month grace period.       

The insurance rules for mergers can be confusing, so if you have questions about the coverage of your accounts after a merger, contact your bank or the FDIC’s deposit insurance experts in our Division of Compliance and Consumer Affairs.

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Last Updated 07/30/1999 communications@fdic.gov