Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

Your Money (and more of it) Is Safe

FDIC Increases Bank Deposit Insurance

October 10, 2008 - News about the stock market is not very good -- unless you're in a buying frame of mind; then there are plenty of bargains to choose from! But there is good news about bank accounts.

The FDIC chairman, Sheila Bair, explained: "The temporary increase in deposit insurance should go far to help consumers maintain confidence in the banking system."

Coverage spelled out

Obviously, it's prudent to only have up to $250,000 in one bank per depositor. But there are some nice exceptions.

1. In addition to an individual account which is insured up to $250,000, you can also have a joint account in which up to $500,000 is insured ($250,000 each). Your joint account can be with a spouse, a child or anyone else.
2. In addition to $250,000 in an individual account and $500,000 in a joint account, IRA deposits are insured up to $250,000 per plan depositor.
3. Accounts that are registered in a Living Trust are insured up to $250,000 per owner, per beneficiary.

Based on the new increased coverage, here's how you could insure up to $1.5 million in one bank. The dollar amounts for each type of account given below are the maximum that can be insured.

Account Owner Account Balance

• Dick's savings account & CDs $250,000
• Jane's savings account & CDs $250,000
• Dick & Jane joint savings account $500,000
• Dick, Trustee for Jane $250,000
• Jane, Trustee for Dick $250,000
  TOTAL DEPOSITS INSURED: $1,500,000

About your account

To make certain that all your money in a given bank is insured and that you're not over the limit, check with EDIE, The Electronic Deposit Insurance Estimator. You'll find EDIE at www.FDIC.gov. Click on "Consumer Resources."

This calculator spells out how much of your money at a bank is insured and how much, if any, has exceeded the limits.

Bottom line

If EDIE tells you that all your money is not insured, you two choices.

One, you could move the uninsured amount to another FDIC-insured institution on your own. To find savings accounts and CDs with the highest interest rates in the country, check with www.bankrate.com.

Two, you could participate in the CDARS program. That stands for Certificate of Deposit Account Registry Service, a network of some 2,500 banks throughout the U.S.

Mark R. DeFazio, president of Metropolitan National Bank of New York (www.metropolitanbankny.com), an early-on and leading participant in CDARS, explains how the proram works:

"When a client comes into one of our banking centers with a large deposit we can place it in CDs via the CDARS service with as many other banks in the network as required, in $100,000 increments. Clients gain the convenience of managing all of their CD investments through one institution as well as the peace of mind that 100% of their deposits are FDIC covered."

To find a bank near you that participates in CDARS, go to: www.cedars.com.

- Nancy Dunnan

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If you want to suggest a column topic for Nancy, drop her a line.

Like what Nancy has to say? you might be interested in the new edition of her book:
How To Invest $50 To $5,000: The Small Investor's Step By Step Plan for Low-Risk, High-Value Investing