I have always advocated saving money for a rainy day. Many people who read this column are retired people on fixed incomes with a life savings of some sort they use to supplement their pension or social security money. Recently, several people wrote me with questions about the Federal Savings Insurance that the USA has on Bank accounts. Even id the bank fails the US Government covers your deposit amounts so you don't loose the money. However, not all USA banks have this insurance, nor are all accounts covered.
So in brief, here's the deal.
WHAT TYPE of Account IS COVERED?
1) Savings and NOW accounts
2) Checking Account
3) Certificates of Deposit
4) Money Market Deposit Accounts
5) Retirement Accounts (IRA, Keogh, etc)
1) Stocks
2) Bonds
3) Mutual Funds
4) Life Insurance Policies
5) Annuities
6) Municipal Securities
WHAT IS THE INSURANCE LIMIT?
1) The limit is $100,000 per person in their single ownership account totals. To Quote the FDIC page:
"deposit accounts owned by one person and titled in that person’s name only. All of your single accounts at the same insured bank are added together and the total is insured up to $100,000. For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $100,000."
2) Retirement Accounts are insured up to 250,000 dollars.
To Quote The FDIC PAGE:
"All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000."
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Now I realize this seems stupid, but that how the law is designed. It was written after the Great Depression to protect peoples savings in banks. It also was written to increase national savings as people would understand their savings were safe in FDIC insured banks. They would feel comfortable saving money. This was demonstrated recently when a bank in the fire ravaged part of California went under. The FDIC paid the bank's deposits, and protected the investors. However, plainly some people did not realize that they needed to keep accounts under 100,000 dollars to be protected. If you have that sort of savings or investments make sure they are protected. If you are saving for the future make sure its in an FDIC insured bank.
here is a link to the Official Federal Deposit Insurance Corporation Information PAGE:
http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html
Check there, and then with your banker to make sure your long term savings are in protected accounts for the full amount.
