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Over 100K: Is My Money Safe?

September 30, 2008 on 2:49 pm | In Finance |

With the economic crisis the United States is experiencing right now, and the growing number of bank failures and seizures because of it, you are likely concerned about your money – and rightly so, particularly if you have more than the standard $100,000 the FDIC insures a depositor for.

FDIC stands for “The Federal Deposit Insurance Corporation”. This organization exists to provide insurance for nearly every banking institution, as well as savings and loan institutions. The FDIC automatically protects individuals and businesses alike, for up to $100,000, in the event of bank failure. In the case of your retirement funds, the FDIC insures up to $250,000. The FDIC will insure a jointly owned account for up to $200,000, but this account must be owned by two people, not a person and a corporation or similar. You can create several more “people” via the use of trusts and joint ownership, but you must be certain to follow the guidelines to the letter so some small mistake does not toss your account out from under coverage. If your bank collapses like a house of cards as Washington Mutual, IndyMac Bancorp, and eleven other banks have done this year alone, your money is guaranteed to be safe up to those listed limits.

But remember - the FDIC does not cover absolutely everything, and certain financial situations will render the insurance coverage null. The FDIC will not cover Treasury bills, stocks, bonds or mutual funds. It will not protect your annuity or insurance items, like your home or vehicle. The coverage extends to the more standard banking procedures, like checking and savings accounts. It will also cover Money Market Deposit Accounts if yours is one that you can write a small number of checks on a month and will cover some CDs, but if, say, you have a CD that you’ve put $200,000 into in order to take advantage of a good rate, you are at risk for losing that excess amount in the event that your bank fails.

One of the best ways of avoiding losing your money due to bank failure is to spread your money around so that none is left out from under the FDIC umbrella, so to speak. Do not keep more than the FDIC limit at any one banking institution, and if you must do so, make sure to follow the guidelines and regulations to the letter to make sure you are safe. Bear in mind that we’ve had 13 bank failures in the past 9 months here in the United States, so this is not being an alarmist at this point; it’s just using good common sense.