FDIC raising from limits $100K to $250K. Yay or Nay?

[boosami]

If each of you can withdraw from the account independently, it would be insured to the tune of $300k. If grandma or mom has to be there and sign for you to withdraw funds, and they both can independently withdraw themselves it is insured to $200k. If mom can't withdraw the funds without grandma's signature/presense, it's $100k only.

[tripods68]

Joint account = two owners. $100k insured for each to a total of $200k insured.

Direct from the FDIC Web site:
Example: John and Mary have a $220,000 CD at an insured bank. Under FDIC rules, each person's share of each joint account is considered equal unless otherwise stated in the bank’s records. John and Mary each own $110,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.

Account Holders Ownership Share Amount Insured Amount Uninsured
John $ 110,000 $ 100,000 $ 10,000
Mary $ 110,000 $ 100,000 $ 10,000
Total $ 220,000 $ 200,000 $ 20,000

I understand the example as $20K is uninsured.

But what happen to the remaining $100K account in your own name or her.

$100,000 in your name
$100,000 in spouse's name

The way I understand FDIC rules in the past, because you already have a joint savings account with your wife, that other account sole ownerhsip worth $100K is NOT covered under FDIC. Banks keeps tracks of members SSN number not by how many accounts they open (regular checking/savings/cd accounts) combined. Not referring to IRA or other investment tied to stock market.

[boosami]

It is not limited to $100k a person. It is $100k per person per ownership category. A joint account is a different ownership category than an individual account, so you are insured for $100k in the individual category and also $100k in the joint category.

You can insure even more in the revocable (and irrevocable) trust ownership categories because the $100k coverage there is by beneficiary, not by account owner. Though the money still belongs to the owner and is in the owner's full control.

[boosami]

I'll just add this on, I found it just a second ago...

Source: FDIC website
The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. With an insurance fund totaling more than $49 billion, the FDIC insures more than $3 trillion of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country.

Thanks for finding that, kork. Though, higher premiums for the banks could stave off some of the liquidity created by raising those limits, which may make it even less justifiable a move. I don't know how much the premium would raise, though. But at least I know it's not coming out of my pocket directly...

[boosami]

Well what do you know... FDIC just revised their rules with an interim change (no word on when it will be revoked). Revocable trust beneficiaries no longer have to be a relative to qualify for coverage.

Under this current rule, coverage could be effectively unlimited as I can name anyone I want as a beneficiary, and be guaranteed coverage.

Source: FDIC: FDIC Federal Register Citations

[kork13]

Under this current rule, coverage could be effectively unlimited as I can name anyone I want as a beneficiary, and be guaranteed coverage.

::raises hand::

[scfr]

For anyone thinking of increasing their deposits at one bank because of this rule change, note the following dates.

According to Bankrate.com article, the increased FDIC insurance limit from $100K to $250K will be in effect Jan. 1 - Dec. 31, 2009, after which it could disappear.

More deposits insured, but for how long?

[m3racer]

That would suck if this legislation is allowed to expire in 2010. I don't think Congress will allow that because than you'll have a bunch of people would be pulling out their $$$$ in 2010.

[cooliemae]

Thanks for finding that, kork. Though, higher premiums for the banks could stave off some of the liquidity created by raising those limits, which may make it even less justifiable a move. I don't know how much the premium would raise, though. But at least I know it's not coming out of my pocket directly...

But that's the rub. The FDIC isn't going to raise their premiums. Congress has told them that they are to go to the Fed for money if they need it, so it might just be coming out of your pocket.

[m3racer]

Just read on yahoo that Congress extended the FDIC insurance of $250k until 2013.

[Pitman]

Just read on yahoo that Congress extended the FDIC insurance of $250k until 2013.

Wow, I'm surprised at the extension.

[m3racer]

In the short term it provides stability which is needed, but in the long term FDIC does not have enough $ to insure such large amounts if more banks fail.

Of course they can. They'll just ask the treasury to print more $$$$. What's another trillion more.