Getting Personal
CDs and the FDIC
Question: I understand that CD's are FDIC insured, but what about the interest on them?
Are you guaranteed just the principal amount or the principal plus interest, too? Mary, Waukesha, WI
Answer: The basic insurance amount is $100,000 per depositor, per insured bank, and that includes principal and accrued interest up to a total of $100,000.
When a bank fails, here's what the FDIC has to say in more detail about the effect on accrued interest.
The FDIC's insurance coverage includes principal and interest through the date of the bank failure up to applicable insurance limit for each deposit. The accrual of interest ceases on all accounts once the bank is closed. If an open bank acquires deposits from the failed bank, the acquiring bank becomes responsible for re-establishing interest rates and beginning the accrual of interest after the date of the failure of the bank. The acquiring bank may change the interest rate on the acquired deposits, but the depositor may withdraw their insured funds without penalty if they chose to do so. If no acquiring bank is found for the deposits and the FDIC pays the depositors directly for their insured amounts, interest does not accrue past the date of failure.
Search
Looking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
Categories
- Banking
- Books
- Budgeting
- Charitable giving
- Credit cards
- Credit counseling
- Credit report, credit score
- Debt
- Dollar exchange rate
- Economy
- Estate planning
- Financial planner
- Housing
- Insurance
- Investing
- Kids and money
- Mutual funds
- Other
- Paying for college
- Retirement
- Retirement savings
- 401k
- Bonds
- IRAs
- Money markets
- Mutual funds
- Savings
- Scams
- Social Security
- Taxes
- Vacation
- Work
- cars
- graduate school
Hot Topic
Latest Posts
Archives
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| 1 | ||||||
| 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 | 13 | 14 | 15 |
| 16 | 17 | 18 | 19 | 20 | 21 | 22 |
| 23 | 24 | 25 | 26 | 27 | 28 | 29 |
| 30 | 31 |
sponsor
Latest Comments
- Tax-exempt bonds vs. taxable bonds (1)
- Eric Vanhove wrote: So, if there are calculators on the net, why should we be reading your blog? Geez, give us the form... [read]
- Buying a few shares (2)
- Manuel Mihalas wrote: I would recommend you minimize your trading cost as much as possible. There are many low cost tradin... [read]
- Bob wrote: I just enrolled my 17-year-old in a no-load Roth IRA that requires no minimum contribution. There a... [read]
- CDs (2)
- Mark wrote: According to this, you can withdraw all of your money penalty free after 6 days, and still get the i... [read]
- mei wrote: Can’t state enough how important the sacrifices that go into wealth creation are. Curious if anyone... [read]
- Home equity line of credit (3)
- Bruce wrote: I disagree about using a credit card unless you plan to pay it off quickly. Especially with credit ... [read]
- DJ wrote: Using a cc is not most sensible option. My financial "guru" would never recommend using a cc that yo... [read]
- Variable annuity (1)
- ann hancox wrote: I took Chris's advice and also agree, they are expensive and once fit my life style. I recently cas... [read]
sponsor
Comments (2)
September 29, 2008 10:27 PM PT
Chris, I have to add that even though FDIC may not guarantee the interest on CD (I can't find it on its website), FDIC continue to honor CD interest rate when it took over IndyMac according to FDIC FAQ #11 on its website http://www.fdic.gov/bank/individual/failed/indymac_q_and_a.html#Interest. Also, when JP Morgan took over WaMu, it continues to honor WaMu CD interest rate http://www.fdic.gov/bank/individual/failed/wamu_q_and_a.html#interest.
September 30, 2008 7:51 AM PT
Yes, you're right and as I understand it honoring the terms is standard industry practice. But just in case, I wanted to make sure that the minimum standard is understood. Thanks, Chris