Posted: January 14th, 2009 | Author: Joe | Filed under: Saving | Tags: FDIC, Savings | 2 Comments »
You’ve probably heard that Congress increased the limit of FDIC insurance from $100,000 to $250,000 back in the second half of 2008, when it seemed the sky would fall any day. But did you know that increased coverage expires on 1/1/2010? I didn’t either.
I saw a sign in my local bank stating the increase in coverage and that it will reset to $100,000 on midnight of 12/31/2009 unless Congress extends it.
So what does the FDIC insurance cover?
- Deposits in checking and savings accounts
- Money market deposit accounts
- Certificates of Deposit (CDs).
The coverage is per institution – not account. In other words, only $250,000 of your total account deposits are covered at each bank. If you have more than $250,000 in assets to deposit, do so at various institutions to split up your insurance coverage.
What’s NOT covered by FDIC insurance?
- money invested in stocks
- money invested in bonds
- money invested in mutual funds
- life insurance policies
- annuities
- municipal securities
These are backed by “the full faith and credit of the United States government”, but not FDIC insurance:
- U.S. Treasury bills
- bonds
- notes
Other important points to note:
Deposits in separate branches of an insured bank are not separately insured.
It is possible to have more than $250,000 in deposits and still be covered under certain circumstances (see your bank representative).
For more info check out the FDIC website.
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Posted: October 28th, 2008 | Author: Joe | Filed under: Economy | Tags: Bank Failures, FDIC | No Comments »
WaMu: Just 1 of 16 failed banks this year.
According to the FDIC list of bank failures, there have been just 16 for 2008 (as of October 24th).
Here’s the list for 2008:
- Alpha Bank & Trust, Alpharetta, GA October 24, 2008
- Meridian Bank Eldred, IL October 10, 2008
- Main Street Bank, Northville, MI October 10, 2008
- Washington Mutual Bank, Henderson, NV and Washington Mutual Bank FSB, Park City, UT September 25, 2008
- Ameribank, Northfork, WV September 19, 2008
- Silver State Bank, Henderson, NV
- En EspaÃnol September 5, 2008
- Integrity Bank, Alpharetta, GA August 29, 2008
- The Columbian Bank and Trust, Topeka, KS August 22, 2008
- First Priority Bank, Bradenton, FL August 1, 2008
- First Heritage Bank, NA, Newport Beach, CA July 25, 2008
- First National Bank of Nevada, Reno, NV July 25, 2008
- IndyMac Bank, Pasadena, CA July 11, 2008
- First Integrity Bank, NA, Staples, MN May 30, 2008
- ANB Financial, NA, Bentonville, AR May 9, 2008
- Hume Bank, Hume, MO March 7, 2008
- Douglass National Bank, Kansas City, MO January 25, 2008
The list itself goes back to 2000 and has hyperlinks to detailed information about each bank failure. Press release, contact info, etc… I think this list is probably better than the selection tool I posted about previously, but that’s just my humble opinion.
photo by marctonysmith
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Posted: October 21st, 2008 | Author: Joe | Filed under: Insurance, Saving | Tags: FDIC, Savings | No Comments »
You may know that deposits up to $100,000 were insured against loss by the FDIC in case of bank failure, and that Congress has upped that coverage to $250,000. Here’s a release from the FDIC detailing the increase (pdf).
But what if your bank has failed and you’re not sure who assumed control or where you money is?
Well, I just found this (somewhat) handy tool at the FDIC website called “Is My Account Fully Insured?”
The tool provides a means to verify whether their bank was FDIC before it failed. Just select your failed bank from the drop down list and hit submit. I said it’s “somewhat” useful because:
“This service will be available for use no later than the first business day after a bank failure and will remain posted for 30 days. After 30 days the data will be removed. This service is only available for banks that failed after July 1, 2008.”
But it still may be of use to you. Here’s some sample results:
For WAMU, Henderson, NV:
“The full balance of each of your deposit accounts has been transferred to JPMorgan Chase Bank, National Association, Columbus, Ohio. To inquire about your deposits accounts call JPMorgan Chase Bank at your local branch office.”
But for IndyMac Bank, F.S.B., Pasadena, CA:
“This tool will only display the status of your account at bank failure and remain posted for 30 days.
Your data has been removed.”
Not so useful, huh? Some banks give detailed info with phone numbers and contact info for a next step. I suppose it’s better than nothing?
Check it out for yourself.
Photo by cramsay23
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Posted: August 14th, 2008 | Author: Joe | Filed under: Economy, Insurance, Saving | Tags: Economy, FDIC, Insurance, Savings | 3 Comments »
True or False:
Federal Deposit Insurance Corp. is only obligated to pay off 7% of the value of my deposits and that it has 99 years to pay off the balance.
I stumbled onto this recently and it caught my attention. There’s a great deal of misinformation and confusion about FDIC insurance coverage and limitations. And, of course, with the list of failed banks growing monthly there’s also a lot of panic about what “FDIC Insured” really means.
The answer to the question above is False (see Myths # 3 and #4 below), but how many people knew that? I went digging and found an article on the FDIC website itself that details many “mythconceptions”, if you will. You can read the whole article here , but this is a quick overview.
Myth 1: The most a consumer can have insured is $100,000.
This is based on the misconception that the FDIC has knowledge of all bank accounts a person has. This is simply not true.
“The reality is that your accounts at different FDIC-insured institutions are separately insured, not added together, and you may qualify for more than $100,000 in coverage at each insured bank if you own deposit accounts in different “ownership categories.”“
So, if you have $100,000 in an individual ING savings account (which is FDIC insured) and you have another $100,000 in a joint checking (FDIC insured) account at HSBC, then you are actually covered for $200,000. The individual and joint account types are considered”ownership categories.”
It’s even better than that:
““Depending on the circumstances, a family of four could have well over $1 million in deposit insurance coverage at the same bank,” said James Williams, an FDIC Consumer Affairs Specialist. “And that coverage is separate from what is protected at any other FDIC-insured institution.”“
So, you could have $100,000 insured at your ING savings account AND another $100,000 insured at your HSBC savings account. Why anyone would want that much in a savings account is another topic…
Myth 2: Changing the order of names or Social Security Numbers can increase the coverage for joint accounts.
“Many depositors mistakenly believe that by changing the order of Social Security Numbers, rearranging the names listed on joint accounts, or substituting “and” for “or” in account titles, they can increase their insurance coverage.”
I’ve never heard of this one, but it doesn’t surprise me. I think it’s rooted in the thinking that the government deals in detailed legalese much of the time, and that if you know the system you can get around the limitations by exploiting the loopholes.
According to Kathleen Nagle, chief of the Deposit Insurance Section in the FDIC’s Division of Supervision and Consumer Protection:
“These moves will have no impact on joint account coverage.”
Myth 3: If a bank fails, the FDIC could take up to 99 years to pay depositors for their insured accounts.
Not only is this entirely false, but it appears to be a common tool of deception used by sales people to steer clients away from FDIC insured products.
“Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor.“
We’ve seen this recently with the IndyMac failure. The FDIC assumed control over the weekend and by Monday, checks had cleared and people’s deposits were available – even up to half of uninsured deposits. All in all, a fairly smooth transition considering the circumstances and initial panic.
Myth 4: The FDIC only pays failed-bank depositors a percentage of their insured funds.
The FDIC site says this is often peddled with Myth #3 by those afore mentioned unscrupulous sale people.
From the article:
“Federal law requires the FDIC to pay 100 percent of the insured deposits up to the federal limit – including principal and interest. If your bank fails and you have deposits over the limit, you may be able to recover some or, in rare cases, all of your uninsured funds. “
It also states:
“However, the overwhelming majority of depositors at failed institutions are within the insurance limit, and insured funds are always paid in full.“
This makes sense. You’ve got to figure that most people either have no where near $100,000 in assets to be protected by FDIC insurance, or they are financially savvy enough that they have that money at work in uninsured assets, like investment accounts, real estate and personal businesses.
Myth #5. Deposits in different branches of the same bank are separately insured.
This is like a cousin to Myth #1.
“FDIC insurance is based on how much money is in various ownership categories (single, joint, retirement, and so on) at the same insured institution. It doesn’t matter if the accounts were opened at different branches – they are considered the same bank for insurance purposes.“
It’s all in the category (account type) and institution folks.
Myth #6. Any product sold by a bank is insured by the FDIC.
Banks sell all kinds of financial products. CDs, checking and savings accounts are FDIC insured, stocks, bonds, and mutual funds are not. It’s important to know the difference. If you don’t know, ask. You can contact the FDIC itself at their website as well.
Myth #7. Each beneficiary named on an IRA (Individual Retirement Account) increases the FDIC insurance coverage.
The truth:
“No, the number of beneficiaries on an IRA does not affect insurance coverage. This misconception appears to be based on confusion with the rules for per-beneficiary coverage of revocable trust accounts“
Well, that’s the first 7 Myths. There are 3 more at the website , but they deal mostly with trusts which is not really my forte.
Hopefully this was helpful, and maybe you learned a few things. I know I did.
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