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FDIC

Are two savings accounts safer than one?

August 26, 2024 By Liz Weston

Dear Liz: My wife and I will be receiving a sizable amount of money. We want to put the money into a high-yield joint savings account. We don’t want to exceed the FDIC protection. Can we each open joint accounts at the same bank and have each account covered up to the $250,000 limit?

Answer: That’s not quite how it works.

FDIC insurance is per depositor, per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs and trust accounts, among others.

A joint account for the two of you would be covered up to $500,000, or $250,000 for each owner. A second joint account at the same bank would not increase your insurance coverage. If you had one joint account plus two single accounts, then your total coverage at the bank would be $1 million ($500,000 for the joint account, plus $250,000 for each individual account).

This assumes none of the accounts has beneficiaries. Naming one or more beneficiaries turns either joint or single accounts into trust accounts, for insurance purposes. Each owner of a trust account is covered up to $250,000 per beneficiary, to a maximum of $1.25 million for five or more beneficiaries.

Filed Under: Banking, Couples & Money, Q&A, Saving Money Tagged With: FDIC, FDIC insurance, savings accounts

Q&A: How deposit insurance limits work

December 30, 2019 By Liz Weston

Dear Liz: My parents, who are in their 80s, just moved and are about to sell their former home. Their net gain from the sale will be approximately $400,000. I am advocating they put this money in a high-yield savings account as capital preservation is key. I know an individual account is insured by the FDIC for up to $250,000. But if we set it up so they are joint account holders, would the FDIC insurance limit on that one account rise to $500,000?

Answer: Yes. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs, revocable trust accounts and irrevocable trust accounts, among others. Each depositor in a joint savings account is covered up to $250,000, so a couple would have $500,000 of coverage.

Filed Under: Banking, Q&A Tagged With: banking, deposit insurance, FDIC, q&a

Thursday’s need-to-know money news

January 5, 2017 By Liz Weston

prepaid-debit-cardToday’s top story: 10 smart insurance resolutions for 2017. Also in the news: Why your prepaid debit card needs FDIC insurance, the assumptions that can make or break your financial planning, and what will cost more – and less – in 2017.

10 Smart Insurance Resolutions for 2017
Strengthening your safety net.

Why Your Prepaid Debit Card Needs FDIC Insurance
Protecting your money.

Key Assumptions That Can Make or Break Your Financial Planning
When assumptions can backfire.

What Will Cost More – and Less – in 2017
What to expect in the year ahead.

Filed Under: Liz's Blog Tagged With: 2017 costs, FDIC, Financial Planning, Insurance, prepaid debit cards

Weak bank? Maybe it’s time to move your money

April 9, 2012 By Liz Weston

Dear Liz: I have all my money (less than $150,000) in one small bank. I love my bank, but Bankrate.com’s Safe and Sound report shows the bank having only a single star. I asked someone at the bank about it, and this person said the rating wasn’t important. Is it?

Answer: Of course it is. Your deposits are under the $250,000 limit protected by the FDIC, but a weak bank can fail, which can be disruptive to depositors. The bank that takes over typically doesn’t have to abide by the policies or interest rates promised by the failed bank. If regulators can’t find another bank willing to take over, you may have limited access to your money for a few days until your deposits are refunded to you.

A bank with “very questionable asset quality, well below standard capitalization and lower than normal liquidity” — phrases Bankrate.com uses to describe your institution — probably isn’t the best place to have your money.

Filed Under: Banking, Q&A Tagged With: bank failure, banking, Bankrate, FDIC, FDIC insurance

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