What are the limits of FDIC insurance?
Bank accounts that have less than $100,000 in them and certain retirement accounts
(IRAs held in CDs and money market accounts) that have less than $250,000 are
fully protected by the FDIC even if the bank fails. If you want to exceed these ac-
count limits, you can keep your deposits fully protected by:
Dividing your money among several different
bank companies. Note that dividing your money
among several different branches of the same
bank does not guarantee full protection.
If you prefer to keep your money in the same bank company, you can still be fully
protected if you divide your money among various “ownership categories”. Owner-
ship categories include a personal account in your name, a personal account in your
spouse’s name, a joint account co-owned by you and someone else, and a trust ac-
count that names someone other than you as a beneficiary.
What are some common ways customers end up with
uncovered deposits?
If you purchase a CD through an investment broker, this CD will often be placed
with a bank at which you already have an account. If the CD and your other ac-
counts exceed the $100,000 limit, you may not be full protected. Before purchasing
CD’s through a broker, ask where they will be placed.
In addition, keep track of the interest your accounts earn so you don’t exceed the
limits this way.
What will happen if your bank fails?
In most cases, depositors can fully access their funds by the next business day. Typi-
cally, failed banks are closed on Fridays, and funds are available by the following
Monday. People can also usually use their ATM cards and write checks over that
weekend as well. And for customers whose accounts exceeded the FDIC limit, all
hope is not lost. Though this amount has varied, they can generally expect to recov-
er 70 cents on the dollar of their uncovered funds after the bank’s assets are sold.
The good news is that the vast majority of US banks are secure, but the above infor-
mation will help you stay fully protected. For more information, visit
www.fdic.gov.
Author: Matt Haskell is a Broker Associate/Partner at The Group Realestate.
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