FDIC safeguards, your savings
Dollars & Sense
The Federal Deposit Insurance Corporation recently increased insurance coverage on bank accounts to $250,000. Until the increase, accounts were covered up to $100,000, except for retirement savings, which have been covered to $250,000 since 2006.
The increase, however, is temporary. The new increased coverage will run through Dec. 31, 2009, at which time the coverage will be reduced to the previous $100,000 amount.The new insurance coverage is as follows:
•Single owner account: $250,000.
•Joint account $250,000: per co-owner.
•Trust Accounts $250,000: per owner per beneficiary.
These amounts apply to the total amount that is deposited in a bank. For example, if you have both checking and savings at one bank, those amounts would be added together subject to the $250,000 cap.
If you’re concerned about the safety of your present bank, consider spreading your money between multiple banks and account types, or investigate credit unions as an option to traditional banks.
Credit unions aren’t in business for profits, and most of them have been less likely to make the risky sub-prime housing loans that have been the downfall of banks across the country.
Shareholders are the members, and having a credit-union account is a good way to get started in the credit world should you need a loan.
To keep credit unions on equal footing with banks, they have been included in the increased insurance coverage legislation. Credit unions aren’t covered by the FDIC. Instead they are chartered by the National Credit Union Administration and covered by the National Credit Union Share Insurance Fund.
No money has ever been lost in a credit-union failure because of the insurance.
Keep an eye on the FDIC Web site [ www.fdic.gov] for press releases and the Consumers and Communities section for up-to-date information. Click on Industry Analysis and Bank Data and Statistics to check on a specific bank.
You’ll also be able to research comparisons between banks and individual bank ratings reports. The Failed Banks link will provide specific information about where accounts of failed banks have been transferred.
You can link from the FDIC site or go directly to www.myfdicinsurance.gov to see how much of your bank account balances are covered by the new legislation.