Are Your Savings Safe?

By: Roger A Lee

The Federal Government set up an independent government agency to insure all bank deposits in the USA. All registered and licensed banks in the US are required to have specific accounts covered by FDIC insurance and to post the FDIC logo.

There are many accounts offered by your bank that are not covered and this must be provided in writing and also all depositors must be informed. These include investment accounts, and high dollar deposit accounts and certain money market accounts.

All standard saving and checking accounts are covered as well as all Certificates of Deposit.

The new higher limit offers compensation to anyone who has money in a FDIC insured bank, savings and loans, credit union or community banks that goes bust.

On the assumption that the insolvency stopped you getting your money out in the normal manner, you would be invited to apply to the FDIC for compensation; the FDIC is a very aggressive and responsive agency and will normally contact you immediately. In most cases the Federal Reserve makes arrangements for another bank to handle deposit and checking accounts so your day to day activities are not stopped and your checks and debit card still work and your balance and deposits are available to you continuously. If the Federal Reserve cannot find a bank to take over the assets or purchase the bank they are closing the Feds and the FDIC will operate the bank until other arrangements can be made.

The plan now is that most savers will receive their compensation within seven days and the remainder of them within 20 days. This is only if there is some confusion on your deposits or your balance is over the approved limits.

We have got a joint account, so how much is protected for us? As before, holders of joint accounts are both eligible for compensation in their own right. So, a payment of up to 250.000 may be made in relation to a joint account.

If you own the bank for a loan or credit card your debt to the bank will still exist and you will still have to repay it - the loan will not evaporate just because your lender has gone bust.

Any money owed to you by the bank, e.g. in a savings account, will be paid in its totality - up to the new limit.

Firstly, there is only one chunk of compensation per saver, per authorized institution. So if you have two or more accounts with one bank your compensation limit will not be greater than for someone with just one account. This means that you should use multiple banks if you have more than the limit on deposit.

This is a more complicated issue, though, if you have money in two or more banks with different names. If they are all part of a wider banking group, or one of its divisions, which has just one overall license then you will still be eligible for only one chunk of compensation. Make sure the banks are not related.

If, however, the banks holding your money are separate, despite being part of a larger group, then you will still be able to claim compensation per bank, regardless of the fact that they may all be owned by one giant institution. This is a bit complicated; it is easier to steer clearly away from these situations.

For example, if you have $185,000 saved with Wells Fargo and $185,000 with Chase Bank, all of this would be protected.

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Barry Norman is a contributor to and blogger at For over ten years has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or looking for your first credit card, can help you make informed decisions.

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