Ask Money

The FDIC, a bank merger, and deposits

Chris Farrell Oct 13, 2008

Question: Hey – Imagine that last week I had $250,000 in deposits in Wachovia and another $250,000 in Wells Fargo, all FDIC insured, all okay. Now that they are the same company, would I still be fully insured? Bill, Louisville KY

Answer: I don’t think I’d go to Las Vegas with you, but as far as your insured deposits go you would be just fine. According to the Federal Deposit Insurance Corp. when two banks merge–whether it’s a shotgun marriage or a voluntary union–the FDIC provides a “grace period” that protects depositors with funds at the two banks. As a general rule, the accounts would continue to be separately insured for 6 months after the merger. The idea is that 6 months gives you enough time to make any needed adjustments to your accounts to stay insured going forward.

By the way, the grace period can be longer for certificates of deposit (CD). When a CD is taken over by another bank thanks to a merger, it continues to be separately insured until the earliest maturity date after the end of the six-month period.

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