After I released the post “ Is Your Bank Safe” several days ago, I received many emails qestioning about FDIC Insurance. They wanted me to give more detailed information about FDIC and how it keep consumers’ money safe and sound. I did a little research and will give you some simple tips on how to keep your money safe and sound in your bank.

First, I’d like to introduce a report about a gentleman who lost $65,000 money during the failure of IndyMac Bank. That man had total of $230,000 on deposit at IndyMac Bank. He was concerned that he might not have full FDIC insurance covered. However, the bank teller told him that he didn’t have to worry about it. The teller explained that FDIC offers full coverage up to $100,000 per account at a bank, and if he opened multiple accounts at IndyMac all of his money would get insured. Obviously, the teller made a big mistake! According to the FDIC rule, the total combined assets of all accounts at a single bank under a persoan’s name can not exceed $100,000. It is very clear that it’s $100,000 per depositor per bank.(Not $100,000 per account.) This means that $130,000 of that man’s money is not insured by FDIC. At last, this man got $65,000 back from that uninsured $130,000. It’s too sad to see that man lose $65,000 at IndyMac Bank because of the misleading bank teller. The most torrrible thing is FDIC said the bank has about $1 billion of “potentially uninsured deposits” held by 10,000 depositors!

That poor man and all the other 10,000 customers who have lost money at IndyMac Bank could have avoided the lost if they know the basic or simple rules about FDIC insurance.

What is insured?

Some general types of accounts: checking, savings, certificates of deposit (CDs), trust, money market, and even IRA retirement accounts are insured by FDIC up to $100,000. Sometimes, the insured amount might be different for special kinds of accounts or ownership categories.

What is not insured?

Generally, the investment products provided by banks are not insured by FDIC. For example, stocks, mutual funds, bonds and life insurance policies are not insured by FDIC. When you deposit money into your bank account, you’d better make sure that your money is safe when the bank has a problem. For investment insurance, you can refer to SIPC (www.SIPC.org).

A must know truth is deposits in separate branches of an insured bank are not separately insured. This is also applied to different accounts under a name in the same bank.

Actually, there are many different types of ownerships as defined by FDIC. There are many situations that you might get insured higher than $100,000.

1. Single Account

All single accounts owned by the same person at the same insured bank are added together and the total is insured up to $100,000.

2. Joint Account

A joint account is a deposit owned by two or more people. And all owners of the account have the same rights to withdrawl the deposits from the account. At the same time, all co-owners must sign the deposit account signature card. For joint account, each co-owner’s share of every account that is jointly held at the same insured bank is added together with the co-owner’s other shares, and the total is insured up to $100,000. That’s to say that two co-owners would have been insured by $200,000.

3. IRA Account

If you have an IRA account at the same bank with other accounts, the IRA is insured by FDIC up to $250,000. This insurance is separated from other ones.

4. Corporation/Partnership/Unincorporated Association Account

If you are a small business owner, this might be helpful to you. Remember that corporations, partnerships, and unincorporated associations, including for-profit and not-for-profit organizations, are insured under the same ownership category. Deposits owned by a corporation, partnership, or unincorporated association are insured up to $100,000 at a single bank.

So, overall, to keep your money safe and sound at a tough time.

1. Learn some basic knowledge about FDIC.

2. Deposit your money at a FDIC insured bank.

3. Keep the amount under $100,000 in each bank if you have more than $100,000 cash in hand.

4. High interest is not always good. IndyMac just increased their rate before it failed.