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Home >> Accounts >> Certificates of Deposit
Bank Bought by Another; How is Insurance Affected?
I had an insured CD with a bank that was bought out by another bank. I also have the maximum insured deposit. Does that mean I no longer have insurance on the other account, because they are now the same bank?
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 You don't need to be concerned quite yet. There are special rules for deposit coverage when banks are merged. Those rules create a grace period during which you can make changes to your accounts and balances. During the grace period, you get the better of two coverage options: insurance as if there are still two separate banks or insurance on a combined-bank basis.
For most accounts, the grace period is six months from the effective date of the merger. For certificates of deposit, the grace period lasts until the first maturity of the account after six months following the merger date. If the CD matures during the six months following the merger date, and is renewed for the same term, for the same dollar amount, with or without accrued interest rolled into principal, and by the same owners, the grace period runs until the next maturity date. If you renew the CD during the six month period for a different term, or add to it or withdraw from it at the renewal, your grace period will only run for six months from the merger.
Published on BankingQuestions.com 10/02/08
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