Excerpted and updated from “How to Be Sure You're Fully Protected by the FDIC,” Fall 2008.
In 85 years, no one has lost a penny of FDIC-insured deposits. You don't need to worry about the safety of your money if you have deposits at one bank totaling less than the basic FDIC coverage limit of $250,000. If your deposits exceed the coverage limit, or if you're just not sure about how much of your money is protected, consider these steps.
Use “EDIE” the FDIC deposit insurance estimator. EDIE will help you understand if you have funds over the insurance limits.
When in doubt, contact the FDIC for additional assistance. You can call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). Specialists are available 8:00 a.m. to 8:00 p.m., Eastern Time, Monday through Friday. If you are a person who is deaf or hard-of-hearing, call 1-800-925-4618. We also have deposit insurance brochures, videos and other materials online.
If your deposits are over the FDIC insurance limit, consider your options. One possibility is to divide the funds among the various ownership categories (single accounts, joint accounts, revocable trust accounts, retirement accounts, and so on) at the same institution, because deposits in separate insurance categories are separately insured. But changing accounts is something you need to think about carefully because, for example, moving some money from a single account into a joint account with someone else means that you are giving that other person legal ownership of the money. Before finalizing your plans, consider discussing them with your attorney, accountant or another trusted advisor. A second option for insuring funds that are over the FDIC's limit is to move some money to accounts at other insured institutions. This option works well for people who don't want, or don't qualify for, other ownership categories at their existing bank.
Periodically review your insurance coverage. Here are suggestions for when to take a closer look:
- Before you open a new account. Think about all the accounts your family owns at an institution, the types of accounts and the names of the beneficiaries. You’ll need this information to get an accurate calculation of your insurance coverage.
- After the death of a loved one. If two people own a joint account and one of them dies, the FDIC will insure the deceased person's share as if he or she were still alive for another six months. This grace period gives executors or other authorized people time to make changes to the account, if necessary, without having to worry about a drop in FDIC coverage. But if the joint account is not restructured within that six-month period, it will automatically be insured as the surviving co-owner's single account at the bank, and sometimes that results in funds becoming uninsured. As an example, if two people have one account at a bank — a $500,000 joint account — and one of them passes away and the survivor makes no change to the account within the six-month grace period, then $250,000 would be uninsured. Please keep in mind that the $250,000 insurance coverage for this account would include principal plus accrued interest.
- If a large windfall comes your way. Suppose you sell your house or receive a large payment from a trust. Make sure any deposits, especially those made on your behalf by third parties, won't put you over the FDIC's limits.
- If you own accounts at two institutions that merge and the combined funds exceed the insurance limit. Accounts at the two institutions before the merger continue to be separately insured for six months after the merger, and longer for certificates of deposit (CDs), but you have to review the accounts within that grace period to avoid a potential problem with uninsured funds.
- Previous Story
- Table of Contents
- Next Story