How Long Can Banks Delay Withdrawals on My CDs?

When you opened your CD, or certificate of deposit account, you agreed to allow the bank to hold a certain amount of your assets for a period of time, called a “term.” The term of your CD may be anywhere from 6 months to 10 years. Generally the longer the term of your CD, the better your interest rate will be. During the term of your CD, you are not allowed to withdraw money from the account without paying substantial penalties. If you do not notify your bank before a certain date, or window, during which the CD comes to term, you may also find that your CD has automatically “rolled over” into another term – and not necessarily at the same rate of interest.

These days, with many banks failing and being taken over by larger institutions, many banking customers are not only concerned about the performance of their CD investments, but also what would happen in the event of a bank failure. If your money is tied up in a CD, and the institution fails, how long can a bank delay withdrawals on your CD account? Generally it depends upon the situation with that institution, but in most cases, unless your bank goes into liquidation, your access to your FDIC insured funds will not change at all. If the failed institution is acquired by another bank, your term will be honored and you will still have the same rights to access your funds as you would under the previous bank’s administration. Aside from a change in bank signage, you may not notice a difference at all under a new bank’s management.

However, if the bank goes into conservatorship, and then proceeds into liquidation, technically, the bank may have the right to delay the withdrawal of your funds until the FDIC can determine the insured amount of your deposits. This may delay your ability to withdraw funds for up to 60 days, or even longer in some cases. If you are concerned about your ability to access your account in the event of a bank failure, check the terms and conditions of your account or call your financial institution to see what laws apply to your case.