FDIC Insurance Limits: What If My Bank Fails? Make Sure Your Money Is Covered

With all these new online banks which are pretty much just virtual branches of a lot of regional banks, I thought it would be a good idea to look more into this whole FDIC insurance thing we put so much trust into. First some quick basics, taken from the FDIC website:

What Does the FDIC Insure?
The Federal Deposit Insurance Corporation (FDIC) is a government corporation that insures all deposits at insured banks, including checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit. Use this form to find out if your bank is insured.

How Much Does It Cover?
The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank.

Way To Increase Your Coverage
Since accounts at different banks are insured separately, the easiest way to increase your coverage is to simply keep less than $100,000 at any one bank. You could have $100,000 each at 500 different banks, and be insured for $50 million in total.

You may also qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories. For example, here is a way that a husband and wife could qualify for $600,000 in total insurance all at one bank:

altext

What Happens If My Bank Really Fails?
First off, I would note that the FDIC does not notify people that their bank is about to fail or has failed. The only way to you find out is when your debit card gets denied or you walk up to your bank and it has a new name. Here is a list of banks that have failed since October 2000, which includes a summary how it was handled.

The Finance Buff has a good post about what happens when your bank goes out of business. The example given is Metropolitan Savings Bank in Pittsburgh, which the FDIC took over just three months ago.

Here’s the timeline: The FDIC announced the bank’s takeover on Thursday. By Monday the deposits have been taken over by another bank, the branches were re-opened, and the insured people have access to their money again.

But, out of the $12 million in deposits in the bank, there were 30 account holders with total assets of $1.2 million not insured by the FDIC. Those people are now creditors to the receivership of the failed bank, and must wait as the FDIC liquidates the bank’s remaining assets. Waiting on the light fixtures to be sold until you can get any of your money back? Not good.

The takeaways here are

  1. Banks still fail, and without warning.
  2. If your money is insured, it is unlikely any failure will interrupt access to your funds for long. Either another bank will take over (they all want more deposits), or the FDIC will pay out from their reserves.
  3. Never exceed FDIC insurance limits, because you may never see your uninsured money again.

Comments

  1. Does this apply to NCUA insurance also? 100k for each insured credit union?

  2. And if one wants to really have the ultimate safe haven, purchase physical gold or silver.

    Sadly, not many Americans, even those with college degrees, really understand how their banking system operates.

    The money is backed by nothing and there are no “reserves”.

  3. In response to don-m.

    Since the monetary system is not backed by gold and silver, how would purchasing those help any? Wouldn’t purchasing a mutual fund, index fund, or even stock be just as safe as purchasing gold or silver?

  4. Margaret Talbot says:

    I was wondering what would happen if an online bank should fail — such as HSBC or ING. One has only the documention that you receive on line and print up. How diligent do you think you should be in printing information — how much how often. You advice would be greatly appreciated.

  5. I guess I don’t know what you mean by the ultimate safe haven. Gold is popular at the moment, that is certain. But for decades it was a pathetic investment.

    Are you suggesting I buy gold and have it physically on hand? Are you suggesting I buy gold and have it in storage somewhere? Unless I have it physically on hand myself, there are issues about whether I can get my hands on it when I need it. But a lot of gold on hand is problematic as well.

    If I have precious metals in storage, I’ll have to pay a storage fee. Perhaps 1%. Great, now my money is exponentially decaying. It has a half-life (a period after which I only have half as much gold just like the way radioactive elements decay). Not just half as much value, half as much metal.

    I’m not saying a person couldn’t have some precious metal on hand. It seems obscure and unlikely, but currencies fail just as banks fail. Perhaps a month’s income worth of silver makes sense. But I think we have to understand that this is purchasing a kind of insurance, and not really an investment (or at best an investment with extreme volatility).

    Personally I have no such stash, but if I were I’d want it to be a small enough amount to have on hand — I’d have it, and I’d not be paying a storage fee and letting my money decay. And I’d want to establish it when silver is cheap, not when metals are setting records. That seems just reckless.

  6. hayhehes says:

    From the article:

    “In most cases, the FDIC would arrange another bank to take over the deposits at the failed bank and the customers continue on without harm. When the FDIC couldn’t find a buyer, it paid out the insured balance from its own fund”

    That makes it sound like the FDIC only pays out the lost money themselves if they cannot find a buyer? Is that true?

    If Bank A fails (meaning they have no more money) then the FDIC takes over and hands the reigns over to Bank B, is Bank B now responsible for all the money owed out? Or does the FDIC always reimburse them up to a $100,000 per customer?

  7. The FDIC has the report on the failure at Metropolitan Savings Bank. There are several details listed that are not included in the newspaper article. From this report it looks like only insured deposit accounts were transferred to the new bank.

  8. Thank you Jonathan for the link to my post. BTW I heard you on the public radio show Marketplace Money the other day. You’ve become a celebrity!

    @heyhehes: When a bank fails, there’s still some money, just not enough to cover all of their deposits. FDIC reimburses Bank B for any shortfall up to the insured limit.

  9. Nathan Whitehead says:

    That’s interesting to see what really happens when banks fail. It reminds me of a story in some 1980′s book. The author recommended really spreading your assets throughout all the banks in the US (before the internet!) as a way to protect against bank failures, frauds, and nuclear wars. The idea being that if you have a couple hundred dollars in thousands of banks, you can drive anywhere in the US and get cash no matter what.

    Regarding gold – I think a more sensible strategy is to invest money in securities and real estate. A collapse of “fiat money” won’t make your land worthless. Google will still be valuable even if there is inflation (they will just be taking in and paying out inflated dollars).

  10. “Are you suggesting I buy gold and have it physically on hand? Are you suggesting I buy gold and have it in storage somewhere? Unless I have it physically on hand myself, there are issues about whether I can get my hands on it when I need it. But a lot of gold on hand is problematic as well.”

    Given that the real inflation rate was at 10% last year for the US and the country is $9 trillion in debt, it would not be a terrible idea. Yes, storage is an issue, but you would like to have something if the fiat paper system becomes worth much less than it is now.

    Every central bank in the world is inflating, so there is no real safe currency.

    You could go with digital accounts like the Liberty Dollar or Goldmoney perhaps. How do we know they have what they say? Well, we know the banks don’t, so it all comes down to whom you would trust.

  11. Steve Austin says:

    I like what Don says about establishing a small “insurance” stash of precious metals. I have some collectible coins (US, silver) but I was thinking about augmenting with some of those sweet Australian lunar calendar gold coins.

    The strategy might go something like this:

    * when you assess that precious metals are in a bear market (perhaps some metric like a high Dow/oz.gold ratio), put 3-5% of your net worth into some coins or something

    * in a metals bull market (like now) consider paring back your grown coin value, back to 3-5% of net worth

    * if the metals market tanks (again) and your coin portfolio is below your insurance threshold, start buying again (perhaps using the investing-in-thirds approach) to restore your % of net worth target

    * in this way, you still are following your self-insurance objectives, yet your are taking some speculative profit on the kitty as well

    So I think the Australian lunar gold coins will have to wait for now. Not much in the way of insurance when there are some signals that we are in a metals bubble.

  12. Stocks are a much better inflation hedge than gold.

  13. Heather says:

    I’m surprised it’s as smooth a process… only days to get funds back… as you outlined. So is there any real benefit to checking the “safe and sound” ratings at Bankrate? If I remember correctly, Metropolitan Savings bank had a high rating (“4″ I think) when it failed.

  14. “Stocks are a much better inflation hedge than gold.”

    Not really.

    What Record High?
    http://www.kitco.com/ind/Schiff/apr272007.html
    “Measured against the rising dollar-denominated prices of just about everything else on the planet, the Dow has actually lost value over the past seven years. Measured against the truest benchmark, the price of gold, the record high for the Dow was set back in January of 2000 when its price equaled approximately 43 ounces of gold. Today it is only worth about 19 ounces.”

    Gold price in various currencies since 1971
    http://www.gold.org/value/stats/statistics/monthlysince1971.html

  15. Jon,

    Are CD’s considered seperate deposits?

    Lets say i had $50,000 in savings with X bank and a CD worth $100K with the same bank?

  16. Ah, the gold and fiat currency debate has arrived at my blog! :) To be sure, FDIC doesn’t protect you from inflation. Uncle Sam controls the printing presses.

    Personally, if something shakes the the world that bad to make money backed by the government useless, the most important thing to me would not to be have some chunks of gold lying around. I mean, would you really pay for things with gold? Or would gold simply be worth $5,000 an ounce or something?

    I’d rather have a close community of friends and family, my own house, and maybe a nice garden, living hippie-style.

    I do like a good catastrophe debate once in a while. What if a big electromagnetic pulse from space wiped out all the hard drives in the world? Think about that for a second.

    Margaret – In the end, it all depends on the bank’s records. I’m sure bank statements can be forged just as easily as an online statement printed out from your computer. I’d just make sure you have some sort of statement (offline or online) with your account numbers, the address on file, transaction history. Something that would match up with their records.

    To me, it makes sense that usually another bank would take over the assets of a failed bank – banks always want more deposits! Why else would they be in rate wars, some offering 6% APY? I bet they get them on the cheap based on the implied bidding process, with the FDIC covering any shortfalls.

  17. Anne Marie says:

    I recently opened an account with Amboy Direct and went to the FDIC website to assure they were members. What concerned me is the bank name and link on the FDIC site was different than the Amboy Direct website. I called them and they assured me they are part of Amboy, just have a different name and website for their national customers. Does anyone know if online affiliates of banks covered under FDIC are automattically covered as well?

  18. Anne Marie says:

    Regarding sri’s post, I asked my credit union that question several years ago and they said all accounts were added together and insured for 100K in total. The article implies that joint accounts are separate. This is a really good question, and I wonder if the rules are set by FDIC or vary by individual banks, seems like that wouldn’t be legal?

  19. FYI…
    Generally, credit union are not insured by FDIC but they are insured by National Credit Union Administration (NCUA)

    Some interesting FAQs about credit unions insured by NCUA:
    http://www.ncua.gov/AboutNcua/ncua_faq.html

  20. The way I read it, it’s $100,000 per legal ownership category, per insured bank. So if you had $100,000 in checking, $100k in savings, and $100k in CDs all registered under your name as an individual, only $100k of that $300k is insured.

  21. Satish Sangapu says:

    Vanguard Money Market Funds aren’t FDIC insured, are they?

  22. Anne Marie says:

    Do you have any protection when you deposit money in banks such as Millenium which have such high CD yeilds? I guess it is a Swiss Bank.

  23. One important addition to the FDIC insurance discussion is something called the Certificate of Deposit Account Registry Service or CDARS. My understanding of CDARS is that banks “trade” FDIC insurance coverage. Therefore you can be insured up to $30 million with one bank. The bank I work for currently uses this and it works quite well, especially for nonprofits that need to insure large deposits (although individuals can use it too). If you’d like to know more, you can check out:
    http://www.cdars.com/individuals.html
    Just thought I would make everyone aware of it in case they were worried about FDIC coverage and didn’t want to work with multiple banks!

  24. I wouldn’t touch Millenium “Bank” with a 10-foot pole. It’s not FDIC insured, and isn’t even a Swiss bank. I think it’s located somewhere in the Grenadines (Caribbean).

    There’s no way anybody can offer 8-9% yield with virtually no default or currency risk when the best any other bank can do is ~6%. If it’s too good to be true…

  25. Anne Marie says:

    This has been an informative thread. The only question I still have is Heather’s. Is there anyway to keep an eye on the health of banks? Any indicators or statistics one should look for when opening an account at an online affiliate to try and catch the high interest offers?

  26. Anne Marie says:

    Just when I thought I was done, another question. I know FDIC kicks in if a bank goes under, but what if, not to be paranoid, someone manages to get hold of your log in info and transfers your money out of your account. Would FDIC kick in then? They would have to transfer it to some account which seems like that would make it difficult to get away with, but just supposing? I’ve had my credit card info stolen and used, and it was a pain, so like CC’s is the bank liable if they transfer your money to someone that is not you?

  27. “The way I read it, it?s $100,000 per legal ownership category, per insured bank. So if you had $100,000 in checking, $100k in savings, and $100k in CDs all registered under your name as an individual, only $100k of that $300k is insured.”

    Jonathan is exactly correct on that point.

    One other thing is that there are some additional insurance programs available, at least in some areas. In Massachusetts, the Depositors Insurance Fund insures all deposits above the FDIC limits at DIF member banks, which is basically most of the state chartered savings banks. DIF is a private company (though I believe it was/is chartered by the state of Massachusetts) so I’m sure some will balk that it is not as secure as FDIC, but… “No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF.”

    DIF’s website lists the banks which are members if you are interested (and rich). https://www.difxs.com/DIF/Home.aspx

    For what its worth DIF has been around longer than FDIC and the latter was modeled on the DIF.

    Anyone know of similar programs in other areas?

    Tom

  28. Ok, another dumb question. When you say you should spread your money across several banks. Does that mean separate branches of the same bank? For example, what if you bank at location 1 of Chase, and decided to open an account at location 2 of Chase, are you insured for $200,000 or still only a total of $100,000

  29. If you are going to say something like “Never exceed FDIC insurance limits” then you should probably be a lot more detailed on what those limits are. Joint ownership and beneficiaries can change the insured amount.

  30. It’s not enough to have the bank claim that they’re FDIC insured — VERIFY IT at the FDIC’s website. There’s quite a few banks and investment scams, especially on-line, which claim to be FDIC insured. Some even claim to be additionally insured by famous insurance houses such as Chubb or Lloyd’s of London, AIG…but are not.

    Here’s an active story about the producer who made the boy bands NSync and Back Street Boys and how we made off with $317 million of investors’ money:
    http://www.usatoday.com/money/companies/regulation/2007-04-09-pearlman-usat_N.htm

    The story neglects to mention the additional ~$200 million he also bilked banks out of.

    If you want a blow-by-blow account of the whole Pearlman saga:
    http://blogs.tampabay.com/money/

    Pearlman even made up fake documentation to suggest his accounts were legitimate, even included a fake Lloyd’s of London insurance certificate. (Photoshop anyone?) Do the legwork yourself, don’t expect a scammer to be truthful.

    Here’s where to verify the bank you are planning on, or already have money with:
    http://www.fdic.gov/deposit/index.html

    If the name & address don’t line up, contact the bank listed on the FDIC website and verify that they’ve authorized the bank/website you’re looking into is authorized by them or is a subsidiary.

    Likewise, for credit unions, there’s NUCA, with similar coverages to FDIC:
    http://www.ncua.gov/ConsumerInformation/index.htm

    Actually, ING Direct has a nice, simple chart which details how the FDIC’s coverage would work:
    http://home.ingdirect.com/faqs/faqs.asp?s=FDIC

    Anne Marie: Unfortunately, the FDIC only comes in when the bank is about to go under. Transfers and such are between you and the bank. I’m sure there’s some gov’t agency to go to if things get ugly, but the FDIC’s only there to insure the deposits, not referee. If you look up the prospective bank on the FDIC website, it’ll give you plenty of links to financial information on the bank. If you want it in plain English,
    http://www.bankrate.com/brm/safesound/ss_home.asp
    has a very good “plain English” description of the financial statements and a 1-5 rating scale.

  31. ING is FDIC insured. The actual bank is ING Direct, fsb and is located in Delaware.

  32. MossySF says:

    Money market funds have SIPC protection — which protects against the investment companies stealing your money but it does not protect against principal loss of the income generating investments. On the otherhand, by law money market funds must hold 90-day or shorter investments of minimum credit grades. Often these instruments are also FDIC-insured or issued by the US Treasury. Hence, there is less underlying risk than a bank lending your money to other people/companies/countries. Say you banked at Fremont Bank who loaned out most of their money to subprime housing — without FDIC insurance, this would be a high risk investment.

  33. dave_j says:

    “I know FDIC kicks in if a bank goes under, but what if, not to be paranoid, someone manages to get hold of your log in info and transfers your money out of your account. Would FDIC kick in then?”

    No. FDIC is protection against bank failure. Fraud would be dealt with by the bank itself, and any appropriate law enforcement agencies. The difficulty of your scenario could be in proving that it was not you that did the online transfers, but there would be an easy to follow trail from any online banking activity that would be easy to follow for law enforcement officials. You would likely just have to file a police report and a dispute with the bank to get your money back.

  34. Anne Marie says:

    I’m getting a little nervous about the direct banks not being listed on the FDIC website. For instance both AmboyDirect and FNBO Direct say they are a subsidiary of banks such as First National Bank of Omaha, but the website address is different, and when you click online banking on the main bank website it is still different. When I do a search on the FDIC site for FNBO direct it doesn’t come up. Guess I should call FDIC and ask or call a number listed on the actual bank website. Any one else open an account with FNBO?

  35. Margaret says:

    Have jumbo cd with First National Bank Mangum, Houston, Tex. which matures on Saturday. We received renewal notice from them but on checking the FDIC website it looks as though something serious is going on. Could you look at this for me please and try to interprete. They said they were FDIC insured when we opened 11 months ago but I wonder? We are seniors and losing this money would pose extreme hardship.

  36. Margaret says:

    Another question. Would it be wise to put only 95,000 into each account since the interest earned would be forfeited if the amount was over 100,000 and the bank failed.

  37. welcome1000 says:

    Is HDFC bank not insured? I checked the below link and the HDFC Bank NY comes back as inactive?

    http://www2.fdic.gov/idasp/main.asp

  38. Well folks, hate to break the really bad news to you. But if banks fail the FDIC has up to 99 years to pay back your money that is FDIC insured…….

  39. Hello Jonathan.

    Could you please modify “Satish Sangapu” to be “Satish” for the comments…. I am trying to make sure my identity is harder to find online, for job search purposes.

    Thanks,
    Satish

  40. Just a clarification. Banks don’t fail because of deposits they fail because of loans. The deposits are transferred to a new bank (actually, a portion are transferred which represents the reserves held vs loans by the original bank and ledger is made to the excess up to the insurance of $100,000 in name). Creditors to the bank are then created as:

    1- depositors (including, I believe, the FDIC to repay them if they had to pay out
    2- general unsecured
    3- subordinate
    4- stockholders

    Secured holders are rare in banks. They are paid back by the sale of the security.

    The reality is that with the US banking system it is very seldom that any money is paid out on insured deposits directly. It is much more likely that you just suddenly have an account at a new bank. You can “claim” your money if you want but most people just keep doing business as usual. Basically the FDIC creates the feeling of security so depositors don’t rush the banking system like 1929/1930.

    Gold is generally considered a hedge investment and usually returns slightly more than inflation. It also acts as a ‘panic’ investment. For those saying gold is the real security blanket…a huge percentage of the worlds mined gold is held by governments (Russia, China, Etc) and institutions that could release it onto the market at any time. It’s a commodity, if supply goes up dramatically what would you expect to happen to it’s price?

  41. It’s true. To avoid losing your interest, you should invest, perhaps, $95,000 instead of $100,000. However, most banks offer the highest interest on “jumbo” accounts, i.e., $100,000 or more. They should consider jumbo accounts to be those whose principal plus interest to be equal to the FDIC $100,000 maximum. But they won’t. Difficult for the little guy to come out ahead isn’t it? The banks hold all the cards.

  42. Remember, you don’t just get a check when the bank fails. It can take up to 10 years to get your money back. If you are going to go with the US, it is better to invest in t-bills with Treasury Direct. At least the bill is shown as being in your name rather than in a third party’s name. You can also transfer funds electronically around the world.

  43. CaveatEmptor says:

    How smart would it be to invest (in the current domestic & global economic environment) say $500K in Microsoft’s stock (or any other “safe” stock) instead of jumbo CDs, assuming all the money is distributed to the number of banks necessary to get 100% FDIC insurance?
    I like your blog, very informative.
    CE.

  44. CaveatEmptor says:

    If I put $100K in a CDs wit the insured bank & that bank fails & gets taken over by another bank & THAT bank fails & gets taken over by the 3rd. bank… Is my $100K insured in the case of “more than one” failure.
    Thanks.
    CE.

  45. What happens if the country falls into a depression????

  46. LOOK!!!!! United States Of America will not go into depression and so what if it does. This country needs a rude awakening anyway!!! Perhaps if we did go into a depression we would all get our heads out of our butts and do something about all the problems we are faceing now!! PERIOD!!!!

  47. MSFT is not entirely “safe” — no stock is.

    DIVERSIFY so you don’t get wiped out.

  48. Avl Dao says:

    A few posters rightfully touched on the timeliness of access to your money at a new account at another institution. Have any of the reforms of the last 20+ years stated the maximum time FDIC has to complete their work and provide you access?
    Query an FDIC official and see how they respond on the timing question (they’ll just recite how timely they were in the past).
    Up until 2005, this was a silly question; sadly, not any more since so many banks in June 2008 are reeling from losses and yet unable to raise money from investors to meet their new loan loss requirements. FDICIA’s ability to act timely amidst a multi-state rash of near simultaneous failures is questionable. I think it’s more likely they will drastically delay declaring failed banks as failed banks once the volume of work becomes untenable, no matter how inadequately capitalized banks are found to be by Examiners. That would buy them the time they need to get caught up.

  49. Are you sure that a husband/wife joint account equals $200k? I think it is $100k per plated account. If I am right, the total FDIC example is $500k rather than $600k.

  50. Yes, if you have a joint account with $200k in it, then person A is insured up to $100k, and person B is also insured for 100k. Total insured for both people is $200k.

  51. james olsen says:

    hello, you speak of married persons joint accounts, and accounts such as husband account in trust for wife and vice versa, how about P.O.D. paid on death accounts, and or my account with an –in trust for my son. if for instance, my account totals 200 thousand dollars and is also listed as in trust for my son or other family relative, is it also FDIC insured for the total of 200 thousand, that is–one hundred thousand each person
    thank you

  52. craig H says:

    A close friend and Wallstreet financier recently recently told me that there is a little known rule that states in the event of bank closure the FDIC has 30 years to reimburse the customer for funds up to $100,000. I find this hard to believe, is there any truth to his statement?

  53. During the Great Depression my grandmothers bank failed. It took my grandparents almost 10 years to get back their money.

  54. The chart is wrong.

    I can’t remember how revocable trusts are handled, but considering only at the individual & joint accounts, total FDIC coverage is $200,000, not $400,000.

    Yeah, it matters.

    One guy quoted in the news had $360,000 at IndyMac.

    Looks like he lost $130,000 overnight (FDIC is covering 50% of deposits over the limit)

  55. Bill – The chart is correct according to everything I have read at FDIC.gov. If you have information otherwise, please provide. Total coverage is $200,000 per person.

    For two people, you can have $400,000 under FDIC limits through 2 individual accounts ($100,000 x 2) + 1 joint account ($100,000 per depositor).

    Check out FDIC.gov. Note that the total in the chart is $200,000.

  56. Diversification is the best protection (real estate, savings, gold, global, stocks smallcap, stocks bigcap, bods of various types, art, …). The FDIC has only $53B in reserve. IndyMac alone may take up $1-8B of that. I believe the more you have the more this idea is valid. If you only have $10K… it doesn’t make sense to get carried away (though… you still shouldn’t have it in one place or one stock!!).

    Question: If a bank also does investments in stocks… are those stocks at risk as well? My feeling is that the bank cannot loan against the “piece of paper / stock” so it is not a liquid asset. But I don’t really KNOW this is true…. for all I know they can sell whatever they have.

  57. So in this example, what would be covered if these accounts were at the same bank?

    Joe Smith individual account 100K
    Sally Smith individual account 100K
    Joe and Sally Smith joint CD 200K
    Joe’s first single member LLC checking 100K
    Joe’s second single member LLC checking 100K

    Am I correct to assume all 600K?

  58. Some of the above posts refer to different types of accounts that are commonly know as “individual”, “CD”, and “joint” accounts. The FDIC refers to these as “ownership categories”.

    The following is from an FDCI brochure that I got from my bank yesterday.

    “You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.”

    IMHO, that little word “may” is very bothersome. Before keeping more than $100K in a single institution, make darn sure it’s not a big “gotcha”.

    For those with more than $100K, CDARs (pronounced “cedars”) may be a good option. Here’s a link:

    http://www.cdars.com/index.php

    With CDARs, your bank divides your moola among member banks (currently there are about 2200 members) in amounts that are covered by FDIC. You negotiate the interest rate with your bank, and your bank sends you a statement.

    Be careful out there.

    Homer

  59. I have heard that the FDIC actually has 99 years to repay insured deposits. Has anyone else heard this and if so where can this info be reviewed?

  60. Just a couple things to add:

    The FDIC also covers Retirement Accounts. Under this category, the sum of all eligible retirement accounts, such as IRAs, are protected up to $250,000 per depositor. So a husband & wife with a joint IRA account would be insured $500,000.

    With testamentary trust accounts (payable on death of the depositor), each beneficiary is insured up to $100,000. So if Joe’s 2 kids are the beneficiaries, the account will be protected for $200K. Joe can also have a second account naming his wife as beneficiary, and that account would be insured to $100K. It gets complicated with living trusts, and if you have both testamentary & living trusts that name the same beneficiaries, each beneficiary will only be insured to $100K.

    It’s almost scary to be wealthy. But think of all the Valium & therapy you could buy to help you cope :P

  61. Yes, but only retirement accounts in cash and at a FDIC bank, right?

  62. If we ever have a large scale disaster or war in our country, stocks or whatever investment accounts will mean nothing when they are not accessible. You’re going to need a little chunk of physical gold to buy food or a gun, or pay a smuggler to get your family across a border. When s*** hits the fan, physical gold or silver is the only way. Gold is $890 an ounce today.

  63. Am I nuts to want to take my money in one CD and convert it to cash and put in my safe deposit box until things get better. That way I would have money to live on until the dust settles.

  64. I hope this clears up some of the questions including the 99 year payback with this “Official” 2006 FDIC info release. However, as one talking head said we are currently in unchartered territory, so who knows what is real and government posturing.

    http://www.fdic.gov/Consumers/consumer/news/cnspr06/leadstory.html

  65. The official line:
    “The truth is that federal law requires the FDIC to pay the insured deposits “as soon as possible” after an insured bank fails.”
    This did give me pause to snicker a bit. Is this the most specific payback time frame they could promise?

  66. My wife and I are married and have 3 kids. My understanding is that we each could have an individual account covered up to $100K each (thus $200K), we could have a joint account covered up to $200K total, we could each have an individual IRA account covered up to $250K each (thus $500K), we could each have a revocable trust declaring each other as the beneficiary covered up to $100K each (thus $200K), and that we could each have three additional revocable trust accounts declaring one of each of our three children as beneficiaries covered up to $100K each (thus $300K x 2 = $600K). Thus under one bank, we could be covered to the total of $1,500K between us both…. is this not correct? Please clarify if not. Thanks.

  67. Math is a bit wrong — adds up to a combined total of $1,700K. Is this correct?

  68. Try the new FDIC Insurance Estimator: EDIE.

  69. Thanks Jonathan. Used EDIE as suggested and confirmed scenario. Combined, insured amount would be $1,700K as described… and this could be duplicated as many times as desired at different banks. Good blog.

  70. Gold & Silver “is” the way to go. With all of the markets dropping like rocks, and the dollar on a steady decline…think back of what was valuable when the great depression of 1929 hit the U.S. History tends to repeat itself approximately every 75 years or so. The ones in the “know” are buying gold and silver because they know it will likely go beyond $2000/oz in the upcoming year. Watch the people that are in a better position & learn from them. They say, “Gold & silver”.

  71. Disgruntled says:

    “If I have precious metals in storage, I’ll have to pay a storage fee. Perhaps 1%. Great, now my money is exponentially decaying. It has a half-life (a period after which I only have half as much gold just like the way radioactive elements decay). Not just half as much value, half as much metal.”

    I hope you realize that the isotope of gold used in the production of currencies and for trade purposes is stable and half-life applies only to radioactive elements and isotopes.

  72. PEOPLE PEOPLE PEOPLE…
    Should you not have waken up from this nightmare you need to understand and realize one thing.

    Hyperinflation is on its way regardless of the bailout. The motor city’s big three is going to be forced to lock their doors and await federal direction come December. Unemployment is speculated to hit 20% come second quarter of 2009. We will see some dark days and our leadership may not have the answers nor solutions.

    What shall ensue is lawlessness, disillusion, riots, bank running and rationing of that which sustains life as we know it – think caveman, think basics – food, water and shelter for a time until faith in gov’t, banking and trade can be restored.

    Gold doesn’t taste good, nor does silver, nor does platnum, nor does petroleum – it has zero intrinsic value should times be “bad”.

    Cover your bases, go long on pork and beans – 25 lb. bags of rice you may find could be worth their weight in gold as will shotgun shells to keep others hands out of your cookie jar until this storm passes.

    This speed bump needs to compel people, families and strangers to work together to recognize and realize ‘common threads’ in society. Forget your portfolios for the next few years and focus on keeping your families healthy and safe.

    Whats happening is a defining moment for American society, there will be those that let us down and put on display the evils of modern societal ills.

  73. Critical Thinker says:

    Wiley, You sound like some of the other “doom & gloom” people that I’ve listened to recently. It’s now January ’09 and the Big Three are still open for business. Sure, things look bleak at the moment, but we will come out of this recession without entering into a depression and the type of issues that you mentioned. Food will not be scarce and there will not be rioting in the streets. I’m just tired of people making outrageous predictions based upon nothing but false opinions.

  74. Critical Thinker says:

    Sorry, meant to say false assumptions, not false opinions.

  75. so what exactly happens if a bank fails

  76. What about depositing in to a Swiss bank account? I know people use them for tax shelters and hiding money incase they get divorced or sued but the prospect of needing 100+ different FDIC bank accounts to secure 10 million dollars is not exactly appealing nor is paying fees to store metals or risking a savings in investments.
    Investments are something all together in my opinion. I am looking strickly at savings.
    The Swiss Bankers Association’s Depositors Protection Agreement protects all deposits and requires all claims be paid quickly. Add to that that their banks are required to have high capital adequacy and the country hasn’t been to war in over 500 years it seems like the safest place to store cash. I can’t find a single case of a living, law aibing person losing money in a Swiss bank. So why bother with the FDIC?

  77. Steve Sr says:

    thank you very much for the link, article, and other links/references available by ‘clicking’ on them thoughout the article. I am sure most of you are all aware by this point(as many comments are outdated) that the insured amount is $250,000 now. This was temporary until 2013, but it has been made permanent in 2010. Yes, if you have a checking account, a CD account, a savings account, amoney market account, etc(as examples), all of those accounts generally need to be under $250,000 after they are added up to be protected. I do not believe a joint account has more protection(referring to one comment if read correctly). However, you are safe if what I wrote above relates to your situation; some extra verification/research doesn’t hurt if you are lucky to have more net worth. Also, your Roth IRA as an example has a separate and guranteed amount of $250,000 insured as well. This was made federal law in 2005 I believe(google NCUA and click on wilkipedia definition for more information). Therefore, you can have up to 250 grand federally insured for a conglomeration of all your accounts while also having “up to” an additional 250 grand federally insured in your IRA (total of both – half a million US dollars). I have a credit union. The link in this article was very helpful…if your credit union is not found under that FDIC link to check insurability, then use this link to verify your credit union while also getting other info of your bank when the search shows you the results:

    http://cuonline.ncua.gov/CreditUnionOnline/CU/FindCreditUnions.aspx

    Unless someone corrects an error on my part here on MoneyBlog, the NCUA and FDIC can be trusted to insure this money. I personally prefer credit unions. Mine has two branches on the planet earth – both in Massachusetts. I moved out of state years and years ago, and I still only use that bank. PS- I don’t use ATMs but I could if I wanted to.

  78. Steve Sr says:

    well, I guess I shouldn’t call my credit union a “bank” (referring to my last sentence), but I guess the terminology will work….

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  3. [...] funds are not insured. If you want that, you should stick with an FDIC-insured bank and mind the FDIC insurance limits [...]

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