The recent IndyMac Bank collapse has caused a lot of worry about which bank will fail next. Customers in the video below may have been waiting all day to withdraw money from their accounts, but they were able to get at least part of their savings back. Do you know which institution guarantees your bank deposits should your bank go down?
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Singh S. Madan
Lola Cruz
Freya
I got it right!
1Let me just say, I had no idea they just insured up to $100,000. Does that mean anything over that could be lost if your bank goes under???
2Der
3Yes, in fact the FDIC insures up to 100,000 per social security number, so even if you play it safe and invest your money in two or three different banks, you could still lose money, but what are the chances that all of those banks would fail?
4Actually, the social security number comment is incorrect. I researched FDIC coverage extensively when eTrade Bank looked shakey, to ensure our money there would be fully covered. From the FDIC.gov web site "The basic insurance amount is **$100,000 per depositor per insured bank**." Key her is the ** part, of course.
Source: http://www.fdic.gov/deposit/deposits/insuringdeposits/iyd.pdf
(see page 2 of the pdf, section titled "Basic Insurance Amount is $100,000")
Also, if you have more than $100,000 at a bank and don't want to move some of it to another bank, there are things you can do to "up" your insurance level. The most straightforward is to create a "payable-on-death" or POD structure for your account. Basically, you add beneficiaries (whom I believe must be related to you -- children, siblings, parents), who get up to $100,000 each on your death - so each beneficiary is covered up to $100,000 separately by the FDIC. I believe you can have up to 4 beneficiaries on a joint account -- so if you and your spouse or sig. other are rolling in the dough you can get up to $600,000 of FDIC coverage at one bank for savings, checking and similar deposit accounts. Retirement accounts are insured separately -- you can have up to $250,000 covered at one bank -- I don't know of any way to increase that amount per bank.
Having said all this, if you do have a lot to protect, there are some advantages to using multiple banks - as that same poster pointed out -- what's the likelihood of several of the banks you chose all failing at once? And, if all your money is at one bank and it does fail, then you may have to go through a formal process to get all your money back from the FDIC, and that could take some time.
hth.
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