mlk_man
05-15-2007, 06:54 AM
Myths About Your Bank Account and FDIC Insurance
Kathleen Nagle
FDIC
Americans depend on insurance from the Federal Deposit Insurance Corporation (FDIC) to protect their savings in the event of bank failure, but many bank customers don’t understand what’s covered. Common FDIC insurance myths...Myth: Any financial product sold by an FDIC-insured bank is insured by the FDIC.
Truth: Bank deposits are covered. These include checking and savings accounts, CDs, Christmas club accounts and money market deposit accounts. Investment products, such as stocks, bonds, mutual funds, annuities and money market mutual funds, are not covered even when purchased through an insured bank. Banks must disclose which products aren’t covered by the FDIC.
Myth: FDIC coverage is limited to $100,000 per customer.
Truth: Your coverage generally is limited to $100,000 per bank and per ownership category -- but you can have more than $100,000 in coverage at one bank if your accounts fall into multiple ownership categories. Example: In addition to the $100,000 coverage for individual accounts...
.Joint accounts owned with a spouse (or someone else) qualify for an additional $100,000 in coverage per co-owner, as long as all owners have equal withdrawal rights.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifIndividual retirement accounts (IRAs) held through a bank qualify for $250,000 in coverage. If you have other retirement accounts at the same bank, they may be lumped together with your IRAs before applying this limit.
Example: A man and his wife each have $100,000 in individual accounts at a bank, another $200,000 in a joint account and $250,000 each in IRAs at the bank. All $900,000 is covered by the FDIC at that one bank.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifCertain kinds of trust accounts qualify for $100,000 in insurance for each “qualifying beneficiary” -- meaning the trust owner’s spouse, child, grandchild, parent or sibling.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifCertain deposits held in a Health Savings Account (HSA) are covered. Details and limits can vary, so contact the FDIC about your situation.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifAccounts of certain types of businesses qualify for $100,000 in separate coverage. However, the accounts of sole proprietors are lumped in with those of their owners for insurance purposes.
If you divide your money among several banking companies, you can protect more. The money must be spread among different institutions, not merely different branches of the same bank.
Myth: I can increase my coverage limits by setting up joint accounts with my young children.
Truth: If your child needs your signature to withdraw money or state law doesn’t allow young children to have their own bank accounts, this joint account will be lumped together with your individual accounts and the total coverage will be capped at $100,000.
Myth: I can double the amount of coverage I receive by altering my name on different accounts.
Truth: Using different names for the same person, such as John A. Smith and J. Adam Smith, or changing the order of names on joint accounts will not affect the insurance coverage.
Myth: The FDIC pays pennies on the dollar, and the government can take years to refund my money.
Truth: FDIC insurance pays 100% of the money lost up to the coverage limit and does so within days.
Kathleen Nagle
FDIC
Americans depend on insurance from the Federal Deposit Insurance Corporation (FDIC) to protect their savings in the event of bank failure, but many bank customers don’t understand what’s covered. Common FDIC insurance myths...Myth: Any financial product sold by an FDIC-insured bank is insured by the FDIC.
Truth: Bank deposits are covered. These include checking and savings accounts, CDs, Christmas club accounts and money market deposit accounts. Investment products, such as stocks, bonds, mutual funds, annuities and money market mutual funds, are not covered even when purchased through an insured bank. Banks must disclose which products aren’t covered by the FDIC.
Myth: FDIC coverage is limited to $100,000 per customer.
Truth: Your coverage generally is limited to $100,000 per bank and per ownership category -- but you can have more than $100,000 in coverage at one bank if your accounts fall into multiple ownership categories. Example: In addition to the $100,000 coverage for individual accounts...
.Joint accounts owned with a spouse (or someone else) qualify for an additional $100,000 in coverage per co-owner, as long as all owners have equal withdrawal rights.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifIndividual retirement accounts (IRAs) held through a bank qualify for $250,000 in coverage. If you have other retirement accounts at the same bank, they may be lumped together with your IRAs before applying this limit.
Example: A man and his wife each have $100,000 in individual accounts at a bank, another $200,000 in a joint account and $250,000 each in IRAs at the bank. All $900,000 is covered by the FDIC at that one bank.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifCertain kinds of trust accounts qualify for $100,000 in insurance for each “qualifying beneficiary” -- meaning the trust owner’s spouse, child, grandchild, parent or sibling.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifCertain deposits held in a Health Savings Account (HSA) are covered. Details and limits can vary, so contact the FDIC about your situation.
http://bottomlinesecrets.com/images/bullets/blue_bullet1.gifAccounts of certain types of businesses qualify for $100,000 in separate coverage. However, the accounts of sole proprietors are lumped in with those of their owners for insurance purposes.
If you divide your money among several banking companies, you can protect more. The money must be spread among different institutions, not merely different branches of the same bank.
Myth: I can increase my coverage limits by setting up joint accounts with my young children.
Truth: If your child needs your signature to withdraw money or state law doesn’t allow young children to have their own bank accounts, this joint account will be lumped together with your individual accounts and the total coverage will be capped at $100,000.
Myth: I can double the amount of coverage I receive by altering my name on different accounts.
Truth: Using different names for the same person, such as John A. Smith and J. Adam Smith, or changing the order of names on joint accounts will not affect the insurance coverage.
Myth: The FDIC pays pennies on the dollar, and the government can take years to refund my money.
Truth: FDIC insurance pays 100% of the money lost up to the coverage limit and does so within days.