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FDIC Consumer News - Fall 1997

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.

Basic Points About the Most Basic Type of Insured Deposit - the Individual Account

The individual or single-ownership account is the most basic type of deposit held by consumers at FDIC-insured banks and thrifts. In its simplest form, it's a checking or savings account owned by just one person. But even with a basic account, it's important to make sure your funds are within the $100,000 insurance limit, just in case your institution fails. To help answer some of the most common questions about individual accounts, FDIC Consumer News provides the following list of key points.

Point #1: Your individual accounts are protected to $100,000 separately from other types of accounts you own at the same institution. In other words, your individual accounts and the interest they've accrued qualify for a combined $100,000 of FDIC insurance at an institution, separate from your joint accounts, retirement accounts and certain business and "payable-on-death" accounts. We'll give more specifics later.

Point #2: To qualify as an individual account for insurance purposes, it must be owned by one person. It cannot be one account owned by two or more people, or by a corporation or partnership.

Point #3: If you are the sole proprietor of a business, your business accounts are insured together with your individual accounts under the same $100,000 ceiling. A sole proprietorship is a business owned by just one person rather than a corporation or partnership. Many small stores or service companies function as sole proprietorships. If you have a sole proprietorship, your personal and business accounts at the same institution would be insured together as individual accounts up to $100,000 in total, not separately for a combined $200,000. On the other hand, if you own a corporation or partnership, your personal deposits are not counted with your business accounts for insurance purposes.

Point #4: You may give another person the right to withdraw money from your deposit account, but be careful not to reduce your insurance coverage. Many consumers are smart to want a loved one to have access to their funds in an emergency or otherwise. But they sometimes change an account without thinking of the implications, including the possibility of reducing their overall coverage at any one bank or thrift. In general, if more than one person can withdraw from an account, it is considered a joint account. However, if you give another person a "power of attorney" to withdraw funds from your account, the FDIC will consider this an individual account, not a joint account. Similarly, if you clearly indicate in the bank's records that the funds are owned solely by you but that you authorize another person to withdraw from the account on your behalf, as a convenience, the FDIC will consider this your individual account, not a joint account. Why does that matter? If you don't understand the rules, you inadvertently may be creating joint accounts and therefore putting some of your money, or your loved ones', over the $100,000 insurance limit for joint accounts.

Point #5: Know the rules for deposits held on behalf of someone else. For example, the funds of an estate that are deposited by an administrator are added together with any other funds the deceased person had at the same institution and insured up to $100,000. Also, a deposit account for a youngster under the Uniform Gifts to Minors Act (i.e., the parent or guardian still maintains limited control over the funds) is insured to $100,000 as the minor's individual account, not as an account owned by or with the adult. (For information about the coverage of "payable-on-death" or "revocable trust" accounts, see the spring 1995 edition of FDIC Consumer News, available from the FDIC's Public Information Center listed on the front page.)

"The FDIC knows that some of the rules for individual accounts can be confusing, even to a banker," says Joe DiNuzzo, a senior counsel in the FDIC's Legal Division. "We also know that every question or concern is important when it's your money at stake." That's why the FDIC has a booklet, "Your Insured Deposits," which provides additional information on individual accounts and other types of deposits. You can get a copy of this booklet free of charge at your local bank or thrift, as well as from the FDIC's Public Information Center and our Internet site (www.fdic.gov). Or, call or write the FDIC's Division of Compliance and Consumer Affairs (see For More Information) for answers to specific questions.

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Last Updated 07/30/1999 communications@fdic.gov