FDIC Cautions Bank Customers About Riskiness of Big Accounts
By: Source: AARP Bulletin Today Date Posted: February 2002
Consumers are being warned to take a careful look at how much money they have in the bank and make sure that all of it would be protected if the bank failed.
If you have more than $100,000 at your FDIC-insured financial institution, that doesn't necessarily mean that some of your funds are uninsured. The FDIC provides separate insurance coverage up to $100,000 for funds you hold in different ownership categories that include individual accounts, joint accounts, trusts and retirement accounts. For example…, the Federal Deposit Insurance Corp (FDIC) automatically insures up to $100,000 what a depositor keeps in any one bank or savings association. But, the FDIC warns in a special report, this may not be enough protection for those who have more than $100,000 in one place.
Since 1999, 15 banks have crashed, taking with them a total of $114 million in depositors' funds that turned out not to be FDIC-insured.
Among those who lost money, the FDIC reports, "were many older people who worked hard to accumulate substantial assets in IRAs and other accounts and mistakenly believed they were fully covered by FDIC insurance."
Even those who don't normally keep large cash accounts may deposit more than $100,000 in one bank for a brief period—after they've sold a house, for instance, inherited funds or received a lump-sum retirement benefit, the FDIC says.
The simplest way of protecting such money is to divide it up among several FDIC-insured banks so that no more than $100,000 is kept at any single institution.
For details on specific circumstances, go here or call toll free (888) 878-3256 and ask for a free copy of the "FDIC Special Report."
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