Worried About the Safety of Your Bank Deposits? You Do Not Have to Be
Most people have heard that the Federal Deposit Insurance Corp., or FDIC, guarantees deposits of $100,000 or less. But few people are aware that about 37 percent of domestic bank deposits are not insured by the FDIC.
The FDIC insures checking accounts, savings accounts and certificates of deposit. However, other financial products now being offered at banks – including mutual funds, annuities and life insurance – are not covered by the FDIC. But that is not, by itself, a reason to worry about the safety of those accounts.
It should be reassuring to know that most financial institutions remain sound – despite the recent failure of IndyMac Bank and the current troubles for several other big banks. Only 90 of the nation's nearly 8,500 banks and savings associations are currently on the FDIC's list of problem banks.
If you’re worried about your deposits, there are several options for making sure your bank or credit union accounts with balances greater than $100,000 are protected. One simple move is to open a joint account, which is insured for up to $200,000.
Another option is to open an IRA. An individual retirement account held at a bank is insured by the FDIC for up to $250,000. That applies only if the retirement account is invested in bank products and not stocks or mutual funds.
Another option is to open a revocable trust account, which is a deposit owned by one or more person who intends to leave the money when they die to a named beneficiary. Each owner of a trust is entitled to FDIC insurance of up to $100,000 for each designated beneficiary. This means the account can be insured for up to $300,000 if there are three named beneficiaries. The catch is that only certain beneficiaries are covered.
Yet another alternative for consumers is to use a bank that participates in the Certificate of Deposit Account Registry Service, or CDARS, which enables consumers to get up to $50 million in FDIC insurance.
– By Ed Coury, Senior Editor and Midwest Bureau Chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950.
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Most people have heard that the Federal Deposit Insurance Corp., or FDIC, guarantees deposits of $100,000 or less. But few people are aware that about 37 percent of domestic bank deposits are not insured by the FDIC.
