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FDIC Insurance After Bank Mergers (Related To Capital One/Discover Discussion)

alan1
  |     |   878 posts since 2015

In another portion of the forum, folks are discussing this topic. I am unable to reply to comments in that section.

FDIC insurance coverage and mergers of Insured Depository Institutions is described by the FDIC at https://www.fdic.gov/deposit/diguidebankers/documents/merger-idis.pdf

(For those who only have CDs, see the section titled "Time Deposits".)

If you have questions after reading the entirety of the "Mergers of IDIs" document, I would suggest that you contact a specialist at the FDIC. My experience with specialists at the FDIC is that they are excellent, as are specialists at the NCUA.

I would not pay much attention to anything told to me by an employee of a financial institution. I wouldn't even bother asking one. I would pay some attention to any written documents issued by involved IDIs.

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14
Listedguru
  |     |   63 posts since 2022
Thanks for posting that fdic document. I have a CD directly with Discover which has a nice (7) year term at a decent interest rate. It has just under (5) years left on it so I sure hope that Cap One can't somehow cancel the CD to change the terms on it? Honestly I'm not sure what the rules are for this but I would hope they would have to honor any CD's that are already on the book?
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4
gbp84
  |     |   92 posts since 2024
Thank you alan1 for posting this information!
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gbp84
  |     |   92 posts since 2024
Received the following email from Discover today regarding the merger and my Discover credit card:

"Discover is now part of Capital One. We're pleased to announce that on May 18, 2025, Discover Bank merged into Capital One, N.A. (“Capital One”). As a result, Capital One is now the issuer of your Discover Credit Card account. This notice applies to each Discover Credit Card account you may have. There is no action you need to take."

I have not received an email from Discover regarding the Discover Bank direct CD I currently have with them. Perhaps one will be arriving shortly. 
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2
sams1985
  |     |   781 posts since 2022
Update on this for those of us holding huge 5% Discover brokered CD's expiring in 2027/2028 - i called Fidelity and was told the brokered CD is a "guaranteed product form the SEC" and that the terms of the contract will be honored till maturity...name could change over to capital one- but i will get a notification. Anyone else receive similar information?
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txFish1
  |     |   477 posts since 2023
sams
I have never heard of a brokered CD being guaranteed by the SEC but like you I hold Discover brokered CD's through Fidelity and also have some funds with Capital One directly that when combined would put me over the FDIC limits. I have a Capital One branch very close to me so I stopped by yesterday and talked to the manager and she told me that the FDIC insurance will stay separate for 6 months from the announced merger date and if you hold any CD's with maturity dates longer than the 6 month period that they will continue to receive their initial FDIC insurance until the final maturity date but not one day past that. I then called my contact at Fidelity and he told me the same thing. I was also told it is now on their website under merger FAQ's but I have not had a chance to check it yet. If you did not feel comfortable with their situation I feel quite sure you could make a nice tidy profit from selling those 5% Discover 5 year CD's in the secondary market. Good luck sir!
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3
Kirkland
  |     |   376 posts since 2014
I too am holding those brokered CD's from both Discover and Capital One. Good to hear this as I had thought FDIC rules were that you were only eligible for full FDIC coverage from each for the 6 month period after merger date.
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gbp84
  |     |   92 posts since 2024
Here is what Discover Bank states in their FAQ section: https://www.discover.com/faqs/discover-online-banking-capital-one-discover-merger/
This information agrees with the FDIC document which alan1 lists above.

“Is my account still FDIC insured?

Yes, your account remains FDIC-insured.

In general, your Discover Bank deposit account will remain separately insured by the Federal Deposit Insurance Corporation (the “FDIC”) from any other Capital One deposit accounts for a period of 6 months after the Merger Date.

This period provides you with the opportunity to restructure your deposit accounts to maximize FDIC deposit insurance coverage if your total holdings at Discover and Capital One exceed the current deposit insurance limit of $250,000 per depositor, per ownership category. For more information about FDIC deposit insurance coverage, please visit Your Insured Deposits | FDIC.

At the end of that 6-month period, your Discover Bank Account(s) will be counted with your other Capital One deposit accounts for determining deposit insurance coverage by the FDIC.

However, Certificate of Deposit accounts that mature after the end of the 6-month period will remain separately insured by the FDIC until their first maturity date after the end of the 6-month period. Certificate of Deposit accounts that mature before the end of the 6-month period and are not renewed or are renewed for a different term or dollar amount will remain separately insured only until the end of the 6-month period. Certificate of Deposit accounts that mature before the end of the 6-month period and are renewed for the same term and the same dollar amount remain separately insured until the first maturity date after the end of the 6-month period.

Please note: Any Capital One or Discover Banking deposit accounts opened on or after the Merger Date are immediately counted with your other Capital One deposit accounts for determining deposit insurance coverage by the FDIC.”
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6
sams1985
  |     |   781 posts since 2022
ANother update- logged into fidelity to see the discover CD now reads:
CAPITAL ONE NATL ASSN VA CD 5.00000% Mar-21-2028

No notification or messages...but all good!
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4
racecar
  |     |   623 posts since 2014
alan1,
If you are referring to the DA bug where one can't post comments to the Financial News area directly, the workaround is: you have to find the thread via the "Latest Threads" area ("Forum" drop-down menu, you'll see "Latest Threads" at the bottom). Scroll down until you find the thread you want. Accessing it that way will let you comment to Financial News threads.
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2
Rickny
  |     |   1,296 posts since 2017
Only used these 2 banks lately just for bonuses.
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1

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