Protecting Cash Investments: 6 Things To Know About Bank Deposit Insurance

Barbara Marquand | guest writer for GoTalkMoney

The spate of bank failures since the economy fell apart is a sore reminder of the crucial importance of deposit insurance. Your savings, checking, money market, and CDs are all safe as long as you bank with FDIC-insured institutions and you stay within the coverage limits.

By all means look for the best banks with the highest savings rates, but don't get so caught up in that research you forget to make sure you're fully covered.

Here are six things about FDIC insurance you should know.

1. FDIC Coverage Through 2013

The current coverage limit for your deposits at any bank is $250,000 through Dec. 31, 2013. Unless Congress acts -- and there is talk of extending this coverage amount -- the limit will revert to $100,000 on Jan. 1, 2014. This is important to keep in mind if you invest in long-term CDs now. Will those CDs be covered if the limit goes down?

2. Qualifying for More Coverage on CDs and other Accounts

Your family can qualify for more coverage than the $250,000 limit if you have the money deposited under different ownership categories. Separate $250,000 coverage is allotted for deposits held in your name alone, joint accounts, accounts that name beneficiaries when you die, and certain retirement accounts, according to the FDIC.

3. Double Check Coverage

Use the FDIC's Electronic Deposit Insurance Estimator -- EDIE -- to check your deposit coverage. The tool asks you to provide information about the deposits you have at one bank, including the balances, ownership category, and names of owners and beneficiaries. After you click on "calculate," the estimator reports whether you're covered and, if you're not fully covered, where your deposits exceed the limits. The tool works for most situations, except for complex trust deposits.

4. When in Doubt, Call

Don't assume your money is safe if you have any doubts. Call the FDIC at 1-877-ASK-FDIC or e-mail using the customer assistance form on the FDIC's Web site if you're unsure whether your deposits are covered.

5. Periodically Review Coverage

Check your coverage when your life circumstances change and your deposits are close to the coverage limit. The death of an owner or beneficiary on an account, for instance, could reduce your coverage, the FDIC says. For instance, if you and your spouse own a joint $300,000 account at a bank, the entire amount is covered because each person's share -- $150,000 in this case -- would be covered up to $250,000. If your spouse dies, the FDIC will insure the full amount for six months, but after that, only $250,000 of the $300,000 would be insured. The six months is a grace period to give you time to make the necessary changes to get full insurance coverage.

6. Protect Investments: Get Fully Insured if Coverage Falls Short

Move some of your money to another bank if your deposits exceed the insurance coverage limit, or consider dividing your money among different ownership categories. But make sure you understand the estate-planning consequences if you take the latter step. The FDIC recommends talking to an attorney or finance advisor to decide the right course of action.

Finally, don't forget about deposits at credit unions, which are insured up to $250,000 per person per institution through the National Credit Union Administration. The administration provides its own deposit insurance estimator, the Electronic Share Insurance Calculator on its Web site to check your deposit safety at credit unions.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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