Q: Can an account that now earns interest be converted to a noninterest-bearing checking
account and upon such conversion be subject to full deposit insurance coverage as a
noninterest-bearing account?
A: Only if the corresponding deposit agreement is modified to convert an account to a
noninterest-bearing transaction account as defined in the Dodd-Frank Deposit Insurance
Provision will an account be eligible for full deposit insurance as a noninterest-bearing
transaction account through December 31, 2012. If the account agreement in any way
allows for the possible accrual of interest, restricts the ability of the depositor to make
withdrawals, or requires the depositor to provide the IDI with advance notice of intended
withdrawals, then that account will not be insured under the Dodd-Frank Deposit Insurance
Provision as a noninterest-bearing transaction account.
This can be found in - FAQ#11 of FDIC’s FAQs. FDIC’s FAQs can be found at: http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf
Article ID: 592, Created: August 19, 2011 at 10:47 AM, Modified: August 19, 2011 at 10:50 AM