Marino on Money: July 14
How does FDIC insurance work?
That is a great question. FDIC insurance can be confusing. I will try and clear up some of the misconceptions and explain how it works.
The FDIC, or Federal Deposit Insurance Corporation is a government agency that insures deposits, or money, at banks and other institutions.
The limit for FDIC insurance was $100k, but was increased in 2008 to $250k. That was good news for people with more than $100k in a bank.
Here is how the FDIC insurance works.
The $250k limit is per account holder, and per institution.
First, per account holder does not mean per person. You could have an individual account, and a joint account. Both accounts could be covered, meaning your individual account could be covered up to $250k, and your joint account could be covered up to $250k. That’s a total of $500k of coverage for the same person because they h that person has two different accounts. Again, this is per account holder, and an individual account is considered separate from a joint account
Next, it is per institution. You could have covered accounts at different banks. Some people have CDs at different banks for this very reason. A person with multiple accounts at multiple banks could have every account covered assuming they had different forms of ownership.
Be careful, a different branch with the same bank does not count. A different bank means a different company. Having money at three branches of the same bank does not triple your protection. If you are unsure about the coverage, go to www.fdic.gov, or just call your bank and ask them.
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