With so many banks closing or mergering, the big word in the papers is :”are you FDIC insured?” FDIC stands for Federal Deposit Insurance Cooperation and it is put in place to protect the consumer’s savings when a market crisis, such as the one we are having now, happens. You can check to see if your bank is insured by using this form. To help provide you with a better understanding, we have done a little research to see what the true insurance limits of the FDIC are.

What Does the FDIC Insure?

The FDIC insures all deposits at insured banks, including checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit.

The main rule is the FDIC will cover up to $100k under one ownership category among different accounts. Therefore Opening Different Types of Accounts at the Same Bank Doesn’t Work!! To break it down a little more; if you have $100K in a CD. $100K in a savings account, and $100K in a checking account, or a total of $300k, only $100k of it is insured.

Protecting over a $100k

Knowing this, how does one protect themselves for a $100k+? The key is to focus not on the accounts, but more so on the owners of those accounts. Therefore, the answer is to open accounts with different legal ownerships. The typical types of ownership are:

  • Single / Individual Ownership Accounts – Only you can withdraw your money.
  • Joint Ownership Accounts – Your or your spouse can withdraw money.
  • Testamentary (Payable on Death) Accounts – Your beneficiary (usually your kids) can withdraw money when you die.

Each of these accounts can be insured up to $100k with the joint ownership account maxing our at $200k based on the fact that two individuals are needed. With this model you are eligible to save up to $400k. So, if you have a ton of cash laying around or are worried how to protect it, look into opening multiple ownership accounts.

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