del.icio.us
Digg
Sphere
Stumble
Technorati
Twitter
A Warning About FDIC Insurance
By Marc Tracy
Several months ago, we noted that one of the few unequivocally pro-small businesses policies put in place as part of the federal government's attempt to bailout the financial industry was the raising of the Federal Deposit Insurance Corp.'s insured-account ceiling from $100,000 to $250,000. It is small business owners, who frequently don't have business accounts, who are most likely to have personal accounts higher than $100k, and insuring them was a great boost to stability as well as the basic convenience of small business owners.
The ceiling is still raised--in fact, said raise has been made permanent (well, it's been put into effect through 2013, and if it's not made permanent or extended further before then, we'll eat our own shorts). Credit FDIC Head Sheila Bair, an altogether remarkable politician--check out this profile of her.
However, a post at OPEN Forum sounds a welcome cautionary note. FDIC coverage is not always all that it appears to be, it seems.
Specifically, there are five instances in which your FDIC coverage is not what you might expect it to be:
-If you think your bank account is a business account (which is entitled to increased protection), but the bank considers it a personal account, then it will only be insured up to $250k.
-If two banks at which you have accounts merge, then your combined account may all of a sudden turn out to be over the ceiling--and, after six months, the amount over the ceiling will be uninsured.
-If your account is non-deposit, then it's not insured. Only deposit accounts are insured. Here's the FDIC's explanation.
-If your account is at one of the 160 credit unions that use private insurance, then it's not insured by the FDIC (it is insured by a private company). Definitely something to ask about.
-If your account contains an employee benefit plan, then it's still insured, but the calculations that determine how much is insured are different; the FDIC explains here.
These caveats need not cause stress. Simply conduct some basic due diligence so that you know exactly what the federal government is insuring of your money. And then bask in the FDIC's comforting embrace.
Comments (0)July 9, 2009 9:44 AM
