Is your Money Safe?
August 25th, 2008 categories: Buyer's Advice, Seller's Advice
Last month’s failure of IndyMac Bank, many people have some serious doubts whether their money is safe. Federal Deposit Insurance Corp. (FDIC) guarantees most bank deposits. Points you may need to know.
What types of accounts are covered?
The FDIC protects certificates of deposits (CD’s), checking and savings accounts, money-market savings accounts and Christmas club accounts. Although Stocks, Bonds, and mutual fund shares even those purchased through an FDIC bank are not protected.
What are the limits of FDIC insurance?
Bank accounts that have less than $100,000 in them and certain retirement accounts (IRAs held in CD’s and money market accounts) that have less
than $250,000 are fully protected by the FDIC even if the bank fails. If you are over these limits you can keep your deposits fully protected by:
1. Sharing your money among several different bank companies. Note that dividing your money among several different branches of the same bank will not guarantee full protection.
2. If you prefer to keep your money in the same bank company, you can still be fully protected if you divide your money among various “ownership categories”. Ownership categories include a personal account in your name, a personal account in your spouse’s name, a joint account co-owned by you and someone else, and a trust account that names someone other than you as a beneficiary.
Have customers ended up with uncovered deposits?
If you purchase a CD through an investment broker, this CD will often be placed with a bank at which you already have an account. If the CD and your other accounts exceed the $100,000 you may not be fully protected. Before purchasing CD’s through a broker, ask where they will be placed. Also, keep track of the interest your accounts earn so you don’t exceed the $100,000.
What will happen if your bank fails?
In almost every case, depositors can fully access their funds by the next business day. Failed banks are closed on Fridays and funds are available by the following Monday. You can usually use ATM cards and write checks over that weekend also. And for customers whose accounts which are over the FDIC limit, all hope is not lost. Though this amount has varied, they can generally expect to recover 70 cents on the dollar of their uncovered funds after the bank’s assets are sold.
For more information, visit www.FDIC.gov
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