Money in cd at Corus Bank, could bank go under? do you think I have high risk?

Question

I have over 200k in a cd at Corus Bank. With the news of IndyMac going under I looked up the stock at Corus Bank and noticed it is at a low of $3 a share. I'm worried this bank is also having a lot of financial troubles. what would happen to my money if this bank went bankrupt? do you know anything abut the financial status of this bank. do you think I should just remove my money early and take a $2000 loss on interest. currently my cd expires in 4 months.

Answer 1

Gary is correct that FDIC insurance covers you up to $100,000, but that is only part of the story.

Multiple accounts with identical ownership are insured collectively for $100,000, so splitting the money into two CDs will not increase your coverage.

However, you can increase your coverage by changing the ownership to payable-on-death accounts.  Have one CD in your name payable-on-death to a relative.  Have another CD in your name payable-on-death to another relative.  The relative needs to be a direct relative such as spouse, child, parent, etc.

For example, an account owned jointly by husband and wife, payable-on-death to their two children, would be insured up to $400,000.  

IRA funds are insured by FDIC up to $250,000.

In terms of what to do now, you may ask the bank if you can change the ownership of your CD, but they might not allow that before maturity.  

If you are really concerned, you can take a partial withdrawal of $100,000 and the penalty for early withdrawal will be applied only to the amount withdrawn.

If it were me, I would wait the four months.  The Feds are not going to let banks fail, in all likelihood.  That would cause a public panic.

Answer 2

Why would any one get a CD that has over 200k in it?  Reffering to the FDIC I would think that your money is only insured up to 100k.  Why not have two CDs for 100k each then you would have been fully covered?  Take your money out so you can sleep better.  I wouldn't get any CDs over 50k.  Ladder your CDs in the future.  Get your CDs one month at a time.

Answer 3

First, Doreen K's answer was very good.  If you do not want to have any penalties and still be FDIC insured, here is what you can do.  Withdraw 100K from your CD and move it to another CD in Corus.  When you create this new CD, make sure you have a different POD (Payable on Death) beneficiary.  Corus bank will not charge you any fees to do this and absolutely no penalties.