What will happen to the interest earned in a Certificate of Deposit if a bank closes?

Washington Mutual has the highest 1 year Certificate of Deposit of 5%.


I understand that FDIC insures the money.


In some countries, although bank deposits have insurance, you can only withdraw that money in limited amounts in a specified time (staggered) if the bank closes. You cannot withdraw the money all at once...





1. If the bank close, can you withdraw the whole money (including the FULL INTEREST) all at once at maturity?


Or will the FDIC insure only the money you deposited initially?





2. If bank closes, What happens if you withdraw it before maturity?


|||Hi,





The FDIC will insure the entire amount of the principal and accrued interest. You will be able to claim all of the money you ought to have been entitled to, up to $100,000.





As to whether you have to wait until the CD matures, you probably will. Otherwise you will incur the normal penalties that will be on the CD agreement. Depending on the situation, it's possible that the FDIC would simply give you the cash amount of the CD but I suspect they would try to hold onto the assets as you're contractually obligated to allow the bank to hold them. And the last thing the FDIC wants when propping up a failed bank is even more of a bank run.





Good luck!|||I believe that the FDIC corp would have to pay you 100% of your principal and interest accrued to date at the time you request it. It may take a couple of days, but you shouldn't have to wait for the CD to mature.