What You Need To Know About FDIC Insurance
What's the FDIC?
The world financial crisis has dried up the credit market, caused financial giants like Lehman Brothers to collapse, and forced big banks to merge, making many people wonder where their money will be safe. Through the FDIC or the Federal Deposit Insurance Corporation the bank is still the safest place to hold your money no matter what happens to your bank. In October 2008 the deposit insurance was temporarily raised to $250,000 per depositor through December 31, 2009, so if your neighborhood bank collapses you will still be gauranteed your deposit up to $250,000.
Understanding FDIC
Established in 1933, the FDIC was made to guarantee public confidence in the banking system. This worked by providing all depositors in FDIC-insured banks coverage up to $5,000 ( in the thirty's ), and second by taking over for a failed bank to gather and sell the bank's assets to settle the bank's debt including claims for deposits above the insured amount. The FDIC receives its funding from premiums paid by insured banks as well as revenues from its investments in US Treasury securities; no federal or state taxes are used.
When are you safe?
To take advantage of the full protection the FDIC offers, there are a couple of things to bear in mind. First FDIC coverage does not extend to all finance establishments so ask your bank if they are covered or check the FDIC site to see whether you bank is listed. Second coverage is for individual deposit accounts only up to $250,000 so no stocks, bonds, safety deposit boxes, hedge funds, etc.
Beyond the $250,000 Coverage
For coverage beyond the $250,000 there are some particular examples like making deposits under different ownership categories where excess coverage is allowed. Revocable Trust Accounts, or a deposit account opened by an individual with the stated goal of the account being turned over to a number of beneficiaries on the passing of the first account holder, can receive over $250,000. As an example if Mr. Jones has a deposit account worth $500,000, both his children would get $250,000 each if they were the beneficiaries named on the account at the time of his death. - 23226
The world financial crisis has dried up the credit market, caused financial giants like Lehman Brothers to collapse, and forced big banks to merge, making many people wonder where their money will be safe. Through the FDIC or the Federal Deposit Insurance Corporation the bank is still the safest place to hold your money no matter what happens to your bank. In October 2008 the deposit insurance was temporarily raised to $250,000 per depositor through December 31, 2009, so if your neighborhood bank collapses you will still be gauranteed your deposit up to $250,000.
Understanding FDIC
Established in 1933, the FDIC was made to guarantee public confidence in the banking system. This worked by providing all depositors in FDIC-insured banks coverage up to $5,000 ( in the thirty's ), and second by taking over for a failed bank to gather and sell the bank's assets to settle the bank's debt including claims for deposits above the insured amount. The FDIC receives its funding from premiums paid by insured banks as well as revenues from its investments in US Treasury securities; no federal or state taxes are used.
When are you safe?
To take advantage of the full protection the FDIC offers, there are a couple of things to bear in mind. First FDIC coverage does not extend to all finance establishments so ask your bank if they are covered or check the FDIC site to see whether you bank is listed. Second coverage is for individual deposit accounts only up to $250,000 so no stocks, bonds, safety deposit boxes, hedge funds, etc.
Beyond the $250,000 Coverage
For coverage beyond the $250,000 there are some particular examples like making deposits under different ownership categories where excess coverage is allowed. Revocable Trust Accounts, or a deposit account opened by an individual with the stated goal of the account being turned over to a number of beneficiaries on the passing of the first account holder, can receive over $250,000. As an example if Mr. Jones has a deposit account worth $500,000, both his children would get $250,000 each if they were the beneficiaries named on the account at the time of his death. - 23226
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Learn more about FDIC insurance at MindOnYourMoney.com - visit the investing site and read the indepth article about FDIC insurance.
posted by X - Men @ 2:03 AM
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