Know Your Options
Is your bank branch closing, perhaps relocating, or maybe your bank is merging with another bank? You may need to decide whether the upcoming change will still meet your banking needs. Read “Thinking About Moving to Another Bank?” for helpful tips on making this decision. Here are options to consider.
Branch Closings:
The closing of a bank branch can be significant for consumers who have difficulties traveling to the next nearest branch or Automated Teller Machine (ATM) or prefer not to bank online. If that describes you, what should you do? If you are thinking about trying online banking to avoid trips to the bank for services, like paying bills, or using direct deposit for receiving your salary and other payments, read “Is Digital Banking for Me?” and ensure you understand how it works before signing up.
Also explore with your bank whether it provides a mobile check deposit service. If the bank does not have an ATM convenient to where you live or work, find out if it will waive fees for using other ATMs. If you still have concerns, research whether another bank may better meet your needs. Any unresolved concerns about access to banking services may be communicated to the appropriate bank regulator.
Branch Closing Notices
At least 90 days before the proposed closing date, the bank must mail a notice to customers of the branch. And, at least 30 days before the closing, the bank must post a visible notice at the branch. (Note: If a bank is relocating a branch elsewhere in the same neighborhood, the rules may be different but generally, the bank must post a notice in the branch for at least 15 days.) These notices will help you understand the bank’s plan for your accounts. For example, if the notice directs you to a nearby branch, determine if its location and hours are convenient for you and what other banking options are available to you in your area. If you have a safe deposit box at the branch and haven’t received a notice regarding it, find out from the bank whether you need to remove the contents before the closing date or whether they will be transferred to another location.
Customers may also experience changes to their banking services during mergers
Each depositor is generally insured to at least $250,000, per account ownership category at each FDIC-insured bank. So, if you have money in two banks that merge into one, as long as your combined total (including accrued interest) is $250,000 or less, all your money is fully protected. If a merger results in you having more than $250,000 in your combined bank accounts, you may still be fully insured. First, remember that deposits you hold at a bank in different account ownership categories such as joint, single and retirement accounts are separately insured to at least $250,000. Read “The Importance of Deposit Insurance and Understanding Your Coverage” for more information.
Under FDIC rules, for at least six months after the merger, your transferred deposits will be separately insured from any accounts you may already have had at the assuming bank (the bank taking over or acquiring your former bank). This grace period gives a depositor the opportunity to restructure accounts, if necessary. This is useful when a depositor holds funds at each of the two banks prior to the merger, each in the same ownership category, and now the combination of funds after the merger exceeds $250,000. If you have a certificate of deposit (CD) from the former bank that has a maturity date within the six month grace period, the CD can be extended once and still maintain the deposit insurance coverage as part of the former bank provided the CD is extended under the same terms and conditions. CDs that have maturity dates that extend beyond the six month period are still insured as former bank deposits until they mature. For more information, please refer to the FDIC’s website review the “Financial Institutions Employee’s Guide to Deposit Insurance” section on Merger of IDIs.
Loans and bank transactions moved to the new bank
A loan is a contract between a borrower and a lender. If your loan is acquired by another bank, you are still under contract to make payments according to the loan agreement. The terms on a mortgage or car loan will remain the same with the new bank.
If you have automatic payments set up, such as for your electric bill or car insurance, be sure to check whether you need to revise your automatic payment information to reflect the new bank. Updating your automatic payments information will help ensure you don’t miss payments.
Additionally, banks can generally change the interest rate or certain other terms for deposit accounts and credit cards, if they provide advance notice to customers and the account contract permits the change. You should always promptly review all correspondence from your new bank. This is particularly important when you become a customer of a different bank after a merger or a bank failure. For example, you would not want to miss a notice from the new bank that it was reducing the interest rate on a CD or that it shows has a different address for you to send loan payments.
Different rules for bank accounts apply when a bank fails. In this instance, if the acquiring bank assumes the failed bank’s deposit accounts, the original contract with the failed bank no longer exists. So, the new bank will create a new deposit contract, perhaps with a different interest rate. Rates on CDs may also be changed. In this case, the failed bank’s customers can withdraw their money without an early withdrawal penalty. If you have, or are considering, purchasing a CD, read “Shopping for a Certificate of Deposit?” for helpful tips.
Knowing your options during a bank branch closing or relocation or bank merger will help ensure your financial needs continue to be met.
Additional Resources:
FDIC How Money Smart Are You? My Banking Check List
FDIC Get Banked!
FDIC Consumer News: Banking With Third-Party Apps
FDIC Consumer News: Financial Empowerment and Inclusion
Consumer Financial Protection Bureau (CFPB): I received an email and text from my bank or credit union asking me to "verify" my account information. What should I do?
For more consumer resources, visit FDIC.gov, or go to the FDIC Knowledge Center. You can also call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). Please send your story ideas or comments to ConsumerEducation@fdic.gov. You can subscribe to this and other free FDIC publications to keep informed!