Financing
| Are your bank deposit resources protected? |
| Published Friday, July 10, 2009 7:00 am |
Do you know how much of your deposits are insured by the FDIC?
Effective May 20, 2009, deposits at FDIC-insured institutions are now insured up to $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance limit will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts, which will remain at $250,000 per depositor. Unlimited Deposit Insurance. Effective November 21, 2008, unlimited deposit insurance coverage was made available through 12/31/09 for certain types of accounts. A non-interest-bearing transaction account includes traditional deposit checking accounts that allow for an unlimited number of deposits and withdrawals at any time, as well as a few other account types (including NOW accounts) with interest rates no higher than 0.50%. Unlimited insurance coverage to specified accounts applies only to banks that are participating in the Temporary Guaranty Liquidity Program (TGLP). The FDIC created the TGLP to strengthen confidence and encourage liquidity in the banking system. Institutions pay an FDIC surcharge in order to participate. Therefore, some institutions have opted out of the TGLP. To see if your bank is participating in the TGLP, please click here. Other Deposit Coverage. Individual situations must be assessed separately to determine just what coverage you have on your deposits. The following example is not intended to be a comprehensive explanation of all FDIC insurance coverage, but is a summary for a common account situation: Multiple Accounts. If you have multiple accounts (e.g., a checking and a money market account) at the same bank under the same name, the amounts in those accounts are aggregated to a maximum insured amount of $250,000. For joint accounts in which both account holders have equal rights to withdraw money, each person's share of all joint accounts at the same insured bank is added together and the total is insured up to $250,000 per person. Example: John and Mary have a $520,000 CD at an insured bank. Under FDIC rules, each person's share of each joint account is considered equal unless otherwise stated in the bank's records. John and Mary each own $260,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.
| Account Holders | Ownership Share | Amount Insured | Amount Uninsured |
| John | $260,000 | $250,000 | $10,000 |
| Mary | $260,000 | $250,000 | $10,000 |
| Total | $520,000 | $500,000 | $20,000 |
What should you do if your deposits exceed the insured limit?
It is possible to maximize insurance coverage within one insured bank by having different owners (i.e., separate account names) on multiple accounts. Your bank representative should be able to assist you in achieving this.
In the case where only one account name is possible, and the deposits will exceed the insurance limits (e.g., an escrow account), utilizing multiple insured financial institutions is the most likely alternative. There is at least one service we are aware of, provided by participating banks, that utilize a formal, systematic system of spreading account balances to up to 500 banks, if necessary, to ensure that your entire balance is covered by deposit insurance. Your "portfolio" of deposits is managed by one bank and you receive a single statement summarizing the status of your deposits. This service places all funds in certificates of deposit having a minimum maturity of four weeks.
For more information about the FDIC and the insurance coverage rules and limits, please visit the following informative web pages:
http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html
http://www.fdic.gov/index.html
http://www.fdic.gov/edie/
A former bank founder and president, Stephen Barnett fully understands the banking industry and has been highly successful in helping individuals and business owners protect their assets, refinance or restructure their loans, and obtain the financing they need to build and grow their businesses. Let his expertise help you. Call Steve today.
Stephen H. Barnett, Ph.D.
Partner
WhiteKnight Solutions LLC
2401 NW Boca Raton Blvd w Boca Raton, FL 33431
Phone: 561.392.3399
Email: steve@whiteknightsolutions.com
Web site: http://www.whiteknightsolutions.com
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