Did you see the gentleman on the news a few weeks ago who had $236,000 on deposit with Indy Mac Bank? He almost lost more than half of his money even though his bank was insured by the FDIC. That’s because the FDIC only insures deposit holder funds for up to $100,000.
Lucky for him, the FDIC in Indy Mac’s case was paying an additional fifty cents on the dollar, so he got another $68,000 back. The bad news is that he lost $68,000. That’s a lot of money to lose.
If you want to protect your savings and deposits, the best way is to understand how the FDIC works and make it work to your advantage.
- First make sure the bank you chose is FDIC insured. To verify that your bank is safe, call 877-275-3342. If your bank isn’t FDIC insured, move your accounts to a bank that is FDIC insured.
- The FDIC insures each account holder up to $100,000. Take a look at these examples to see how to protect your money:
Checking Account $25,000.00
Savings Account $50,000.00
Total Amount at Bank: $125,000.00
* Jane is only insured up to $100,000.00. She would lose $25,000.00 if her bank failed.
Greg and Sally Jones
Mutual Checking Account $15,000.00
Greg’s Savings Account $75,000.00
Sally’s Saving Account $30,000.00
Total Amount at Bank: $120.000.00
* Greg and Sally are insured up to $200,000.00. They are two different account holders. If they had a mutual savings account instead of two separate accounts, they would lose $20,000.00
Here are some other things that you need to be aware of:
- The FDIC insures $100,000 per account holder per bank, not per bank branch. Yes, some people have made that mistake. The branches aren’t separately owned. If you deposit money in the Springfield Bank – Centerville Branch and then open a new deposit account at the Springfield Bank – Mall Branch, that’s still the same bank, and the FDIC considers it to be all one pile of money. The same applies if you open one account at Springfield Bank – Online and one at a physical branch. If you have more than $100,000 to lose, use two or more separate banks.
- If you have a small business that uses your personal social security number as the tax identification number (i.e. Mary Brown, D/B/A Mary Brown Personal Chef) then that balance is part of your $100,000.
- If your bank is taken over by the FDIC, chances are that another bank will buy the accounts of the failed bank. When that happens, you have six months grace period under FDIC to reorganize your accounts if needed.
You work hard for your money, so keep it as safe as possible. Don’t lose money that you could have easily protected.