FDIC Deposit Insurance- Rules, Limits, and Account Coverage Information

Even though the recent 700+ billion dollar bailout raised the FDIC limits from $100,000 to $250,000 (although this is also temporary, through December 2009) per eligible account, the rash of bank failures and the potential for even more in the near future still has many people wondering if they are covered should something happen to their bank. So how do you find out if your covered, and if your accounts are protected?

Here is some of the basic information from the FDIC website:

FDIC Insurance Basics
The FDIC (Federal Deposit Insurance Corporation) insures deposits in most banks and savings associations located in the United States. The FDIC protects depositors against the loss of their deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.

Is my bank insured?

For simplicity, the term “insured bank” is used to mean any bank or savings association that has FDIC insurance. To check whether a bank or savings association is insured by the FDIC, call toll-free at:

1-877-275-3342

use “Bank Find” at:

www.fdic.gov/deposit

or look for the official FDIC sign where deposits are received.

What does FDIC deposit insurance cover?
FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs).

FDIC deposit insurance covers the balance of each depositor’s account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank’s closing.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank.

The FDIC does not insure U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.

Also, if you are married, both you and your wife can have separate accounts which are fully insured for $250,000 each, as well as a joint account which is insured up to $500,000. So your total could be up to $1,000,000 combined.

Revocable trusts are eligible for FDIC insurance coverage, and can sometimes be much higher than $250,000, as they can have joint owners and joint beneficiaries. This can get a little more complicated, so it is better to check your own personal situation if you fall under this category. Some irrevocable trusts are eligible as well.

As for me, I don’t have to worry about the coverage limits, and since I use several large banks that I know are covered by the FDIC, I know I am OK. But if you are not sure, it is good to check, at least for some peace of mind.