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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Winter 2010/2011

Unlimited FDIC Insurance for Certain Transaction Accounts: A Closer Look
Answers to common questions about which deposits qualify under the new, temporary program

Readers of FDIC Consumer News know that under the Dodd-Frank financial reform law enacted last July, certain checking accounts that pay no interest will benefit from full deposit insurance coverage — regardless of the dollar amount — during the two years from December 31, 2010, through December 31, 2012. Because the FDIC continues to get questions about this new program, we are highlighting important information.

Which accounts qualify for this temporary, unlimited deposit insurance coverage?

The only accounts eligible for the full insurance coverage are those in a new deposit insurance category called "noninterest-bearing transaction accounts," which are checking accounts that cannot pay interest.

"Please remember that the unlimited coverage program does not apply to just any checking account that does not pay interest," stressed Martin Becker, an FDIC Senior Deposit Insurance Specialist. For example, if you have a money market deposit account that does not pay interest, it would not be eligible for unlimited coverage because it does not fit the technical definition of a noninterest-bearing transaction account. Also, if you have a deposit that is currently not paying interest but the deposit agreement allows for interest, this account would not qualify for unlimited coverage.

Who may benefit the most from the new program?

While these transaction accounts are primarily used by businesses with large balances in their checking accounts, any depositor qualifies. The new full-insurance category will be especially helpful for consumers who have a very large sum of money they want to safely park in a bank account for a brief period — perhaps from an inheritance, a home sale, or a big payment from a pension or insurance claim — until the funds can be invested elsewhere.

Do I have to do anything extra to obtain the unlimited coverage?

No. "All FDIC-insured banks are automatically covered under this new regulation, and all accounts that meet the statutory definition of a noninterest-bearing transaction account are automatically covered," Becker explained. "So, if your account meets that definition, you do not have to apply for this unlimited coverage."

How is my FDIC insurance coverage calculated if I have both noninterest-bearing transaction accounts and other accounts at the same bank?

The temporary unlimited coverage for noninterest-bearing transaction accounts is separate from, and in addition to, the coverage provided to depositorsí other deposit accounts at the same bank. As an example, if you have a certificate of deposit for $250,000 and a noninterest-bearing transaction account for $300,000, both of these accounts would be fully insured.

How does the new coverage differ from the FDICís Transaction Account Guarantee Program that ended on December 31, 2010?

According to FDIC Supervisory Counsel Joe DiNuzzo, "Perhaps the most important difference to remember is that the new account category does not include unlimited coverage for Negotiable Order of Withdrawal or "NOW" accounts, which are interest-paying checking accounts available only to consumers, charities and public entities. Congress did not include NOW accounts in the definition of noninterest-bearing transaction accounts."

How can I get more help or information regarding this temporary program and my FDIC insurance coverage in general?

Call the FDIC toll-free 1-877 ASK-FDIC (1-877-275-3342) or visit www.fdic.gov/deposit/deposits.


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Last Updated 2/22/2011

communications@fdic.gov