If you have CD's in a bank that might fail, should you take the penalty and cash the CDs in?
Answers
368 points
ads answered 10 months ago …
If the value of the CD is less than what is covered by FDIC (at least I think they would cover up to a certain value of funds, but then I've never actually used CD's) then there is no need as you will be covered, but it might be wise to talk to someone at the bank in regards to how much of the funds that you have deposited into CD's would be covered.
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265 points
fuzball answered 10 months ago …
If your CD amounts to $250,000 or less you are safe. Anything over that won't be covered. If the bank fails you will probably lose ongoing interest on that deposit but your covered up to that FDIC limit anyway. The problem might be having to wait until regulators settle the issue before you could do anything with the CD. A day, a week, or? If you have more than the insured limit in your CD, it would be advisable to split off the excess into another CD. You could have as many CD's as you wish, in as many different banks as you wish, with all of them covered up to the FDIC limit of $250,000.
Wish I had that problem.
2082 points
alanj answered 10 months ago …
No, unless it's over the insured level. If it is over the insured level then withdraw only the amount over that level. That way the penalty will only apply to the withdrawn amount.
Fuzball said the following "You could have as many CD's as you wish, in as many different banks as you wish, with all of them covered up to the FDIC limit of $250,000.". That's not quite correct. If you have as many CD's as you want under the same titled account in one bank and the CD's added together are more than the insured amount then you are only covered up to the insured amount on the combined total not the individual CD. You are insured on the titled account from each separate bank not the individual CD.
