FDIC insurance

[Ima saver]

I just found out something that I did not know. I went down to my local bank today to open an account in my name only.
You see, the account I have jointly with dh has close to $300,000 in it and I was worried about the amount being too high for FDIC insurance.
I thought I could open one account in my name only and one account in his name only and keep the joint account.

That is not the way things work.
FDIC insures each PERSON on all your accounts for $100,000 each. So we have $200,000 insured. If we add a third name, we will have all $300,000 covered with insurance. (Too bad we have no trustworthy relatives)

[poundwise]

Yes, absolutely right. Two account holders with a joint account are each covered for $100,000 or a total of $200,000 for the joint account.

On the flip-side, something else to note, the $100,000 per account holder insurance applies to the total of all the accounts you have with an institution. So, if (for simplicity) a single account holder has a checking account with $50,000 and a savings with $75,000 at the same bank, they are not fully covered by FDIC insurance because they have $125,000 total on deposit.

There are other facts and features of FDIC insurance that people don't know about as well. It makes an interesting read.

FDIC Brochure: Your Insured Deposits (pdf)

[Ima saver]

I know, I am so glad that they gave me a brochure at the bank to read all about it.

[humandraydel]

Well, for the record, you should be able to have an individual account that is separately insured for 100k. So, theoretically, you and your husband could have $400k insured at each bank:

100k individual account in your name
100k in joint account in your name
100k in joint account for your husband
100k individual account for your husband

[Ima saver]

No, that is not true, but It is was I thought. One joint account, one account in my name only and one account in his name only.
That is not the way it works. Each person is insured for $100,000 total. If there are only two people, they are only insured for $200,000.

The only way to be insured for $400,000 is to have 4 names on the accounts.

[Ima saver]

I am not that surprised that a lot of people are not that familar with fdic insurance. Most people don't keep enough money in the bank to worry about it.

[scfr]

If it's a straight joint account, then yes the limit is $200,000. You can be covered for over $200,000 but it depends on who is the beneficiary upon your death.

But it's important to remember that even if you are covered by FDIC insurance, there is now way of knowing how long it would take for you to recover your money should your financial instutition fail. [If anyone out there has had experience with a financial institution failing, and can tell us how long it took them to recover their funds from the FDIC, please share with us.] I would never want to have all of my money (even if it's all insured) in one bank and have to wait on the slow-moving wheels of government before I could get my hands on my money.

[Ima saver]

The booklet I picked up regarding FDIC insurance, says that you will recover your money within a few days, so that is not bad.

[humandraydel]

This is a quote from the FDIC website regarding the insurance:


"Deposits maintained in different categories of legal
ownership at the same bank can be separately
insured. Therefore, it is possible to have deposits
of more than $100,000 at one insured bank and
still be fully insured."

Single accounts and joint accounts qualify as "different categories of legal ownership". I suspect maybe the bank teller didn't know the rules.

[Ima saver]

This is ture, but it applies to self directed retirement account, revocable trust accounts and payable on death account.

For most of us, we just have joint accounts. This is what the FDIC booklet says, "The basic insurance limit is $100,000 per depositor, per insured bank. There fore a joint account will have an insurance limit of $200,000 for the two people who hold the account.

[boefixepa]

Ima, you could get another account at another bank and at least then your money would be protected. Maybe the rates would not be as high. Or maybe finally open up that internet savings account (ING, ImDirect ect). That way you could still get the good interest rate.

Another thing I've heard is that you don't get 100% of your money. But that was from the great depression times and maybe they didn't pay 100% back then. But I've heard that depending on the situation and the bank it's self and it's standing you may not gett 100%. Maybe like .75 cents on the dollar or something like that.

[disneysteve]

Also remember that $100,000 of insurance means if you deposit $100,000, any interest you earn would put you over the limit. If you are getting 5% or more interest, after a year, you'd have over $5,000 uninsured.

[humandraydel]

This is ture, but it applies to self directed retirement account, revocable trust accounts and payable on death account.

For most of us, we just have joint accounts. This is what the FDIC booklet says, "The basic insurance limit is $100,000 per depositor, per insured bank. There fore a joint account will have an insurance limit of $200,000 for the two people who hold the account.

You are completely correct. A joint account with 2 names will have an insurance limit of $200k. Additionally, IRAs, revocable trusts, etc ARE separate categories and are insured separately (IRAs up to 250k per person).


However, it is also true that single owner accounts are a separate legal ownership category from joint accounts. The following is a question in the FAQ on the fdic.gov website:

Can I increase my insurance coverage by dividing my deposits into several different accounts at the same insured bank?

Deposit insurance coverage can be increased only if the accounts are held in different categories of ownership. These categories include single accounts, retirement accounts, joint accounts and revocable trust accounts.

[Ima saver]

I got a call from my bank today, so i will go in. She said they could set something up so I can be insured for $300,000. I have put money in other local banks paying over 5%

[Ima saver]

Ok, I got it. I left $200,000 in one joint account, so we each have $100,000 insurance. Then we opened a POD acct. in my name only with my husband as beneficary. The is a Payable on death acct, and informal revocable trust. It gets $100,000 insurance coverage. We are covered!!