How to Protect Your Bank Deposits

The recent take-over of the IndyMac Bank by the Federal Deposit Insurance Corporation (FDIC) has a lot of people understandably concerned about their own bank accounts.

While not nearly as many banks are expected to fail from bad loans as the nearly 900 banks that went under in the early 1990s, many of us who never worried about the safety of our assets in a bank are now very concerned….with good reason. The sub-prime mortgage crisis is far from over.

Let's take a few minutes to help you understand how to protect your deposits.

Dolan Straight Talk Tip: The best way to keep your assets safe, even in the event your bank fails, is to make sure it is properly insured by the FDIC.

The unfortunate fact of life for an estimated 10,000 depositors at IndyMac is that nearly $1 billion of their assets are NOT covered by FDIC insurance. Sadly, much of that may be lost.

Much more money in banks across America is at risk. The amount of uninsured deposits has doubled in the past 15 years to more than $2 TRILLION!

You don't want your money in that "uninsured" category, so here's what you need to know about FDIC coverage.

FDIC Insurance 101

The first step is to make sure your bank or savings association is an FDIC-insured institution. The good news is that the FDIC insures deposits in most banks and savings associations in the United States, and it is backed by the full faith and credit of the U.S. government. Double-check your bank to be sure it's FDIC insured. If so, you're protected against the loss of your money under most conditions if the bank fails.

Here's the straight scoop on what's covered and what's not:

1. What's covered: FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts and time deposits such as certificates of deposit (CDs). Deposits in separate branches of a bank are not separately insured. However, deposits in one bank are insured separately from deposits in another bank.
2. What's not covered: Money invested in bonds, stocks, annuities, life insurance and mutual funds is not covered. Also…the FDIC does not insure safe deposit boxes or their contents, but that doesn't mean you'll lose what's in them. In the event of a bank failure, the FDIC, in most cases, arranges for an acquiring bank to take over the failed bank's offices, including locations with safe deposit boxes. If no acquirer is found, box holders would be sent instructions for removing the contents of their boxes.
3. How much is covered: Each "qualifying account" is insured up to $100,000 and most retirement accounts up to $250,000. This includes all of the principal and any accrued interest through the date of the insured bank's closing (up to the insured limit).

Next: How to Check Your Bank's Safety