What You Need To Know About FDIC Coverage
What You Should Know About the FDIC
The world financial crisis has dried up the credit market, caused financial giants like Lehman Brothers to collapse, and forced big banks to merge, making many people wonder where their money will be safe. Through the FDIC or the Federal Deposit Insurance Corporation the bank is still the safest place to hold your money no matter what happens to your bank. In October 2008 the deposit insurance was temporarily raised to $250,000 per depositor through December 31, 2009, so if your neighborhood bank collapses you will still be gauranteed your deposit up to $250,000.
Understanding FDIC
Established in 1933, the FDIC was created to ensure public confidence in the banking. This worked by providing all depositors in FDIC-insured banks coverage up to $5,000 (in the 30s), and second by taking over for a failed bank to collect and sell the banks assets to settle the banks debts including claims for deposits in excess of the insured amount. The FDIC receives its funding from premiums paid by insured banks as well as earnings from its investments in US Treasury securities; no federal or state taxes are used.
What is Safe?
To use the full protection the FDIC offers, there are two things to keep in mind. First FDIC coverage does not extend to all financial firms so ask your bank if they are covered or check the FDIC site to see if you bank is listed. Second coverage is for individual deposit accounts only up to $250,000 so no stocks, bonds, safety deposit boxes, hedge funds, and so on.
$250,000 - Beyond?
For coverage beyond the $250,000 there are some specific examples like creating deposits under different ownership categories where excess coverage is allowed. Revocable Trust Accounts, or a deposit account opened by a person with the stated goal of the account being turned over to a number of beneficiaries on the demise of the original account holder, can get over $250,000. For instance if Mr. Jones has a deposit account worth $500,000, both his children would get $250,000 each if they were the beneficiaries named on the account. - 23212
The world financial crisis has dried up the credit market, caused financial giants like Lehman Brothers to collapse, and forced big banks to merge, making many people wonder where their money will be safe. Through the FDIC or the Federal Deposit Insurance Corporation the bank is still the safest place to hold your money no matter what happens to your bank. In October 2008 the deposit insurance was temporarily raised to $250,000 per depositor through December 31, 2009, so if your neighborhood bank collapses you will still be gauranteed your deposit up to $250,000.
Understanding FDIC
Established in 1933, the FDIC was created to ensure public confidence in the banking. This worked by providing all depositors in FDIC-insured banks coverage up to $5,000 (in the 30s), and second by taking over for a failed bank to collect and sell the banks assets to settle the banks debts including claims for deposits in excess of the insured amount. The FDIC receives its funding from premiums paid by insured banks as well as earnings from its investments in US Treasury securities; no federal or state taxes are used.
What is Safe?
To use the full protection the FDIC offers, there are two things to keep in mind. First FDIC coverage does not extend to all financial firms so ask your bank if they are covered or check the FDIC site to see if you bank is listed. Second coverage is for individual deposit accounts only up to $250,000 so no stocks, bonds, safety deposit boxes, hedge funds, and so on.
$250,000 - Beyond?
For coverage beyond the $250,000 there are some specific examples like creating deposits under different ownership categories where excess coverage is allowed. Revocable Trust Accounts, or a deposit account opened by a person with the stated goal of the account being turned over to a number of beneficiaries on the demise of the original account holder, can get over $250,000. For instance if Mr. Jones has a deposit account worth $500,000, both his children would get $250,000 each if they were the beneficiaries named on the account. - 23212
About the Author:
Educate yourself about FDIC insurance at MindOnYourMoney.com - click to the money site and read the full article about FDIC insurance.
posted by X - Men @ 11:46 AM
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