This week we have been talking about FDIC insurance. In 2008, the limit was increased from $100k to $250k. That applies to each account holder at each institution. A person could have an individual and joint account covered at the same bank. Remember, a different branch of the same bank doesn’t count. In 2010, the limit is lowered back to $100k, but retirement accounts, such as IRAs, will remain covered up to $250k.
CDs, checking, and savings accounts are covered. Investments are not. Make sure you understand what is and is not covered by FDIC insurance. If you are unsure, just call your bank and they will be happy to explain.
When a bank fails, insured deposits are completely covered. Federal law requires the FDIC to pay the deposit insurance “as soon as possible.” According to www.fdic.gov, in most cases the insured funds are available the next business day after the bank is closed. As we have seen this year, another bank assumes the deposits. This sometimes happens over the weekend. There are certain accounts that may take longer than a day. But for the most part, it is business as usual when the new bank takes over. There should be no immediate changes to your account numbers, and your checks will good. Assuming, of course, your checks were good before the bank failed.
Nobody likes to see a bank fail, but we have seen quite a few in 2009. Fortunately, not one bank customer has lost one dollar on deposit due to a bank failure. There may have been some inconveniences for the customers, but their money is still their money.