Many Americans have felt uneasy over the last several days since viewing news reports about IndyMac Bank’s assets being seized by federal regulators due to the mortgage lender’s folding under the pressures of tighter credit, tumbling home prices and rising foreclosures. While the large size of the bank may be unsettling, there’s no need to panic. In fact the U.S. banking industry as a whole is actually very safe and sound.
While the IndyMac situation is upsetting, in actuality the majority of the over 200,000 customers who were FDIC insured have not been financially affected. For the small percentage of those whose funds were not completely insured, their insured amounts were fully covered as well as half of their uninsured money. When IndyMac’s assets are sold they may receive further compensation.
Still, even with this reassurance, FDIC insurance can be very confusing in terms of managing your account to make sure you are covered in the event of your bank being forced to close their doors. The following is some useful information that will help you to better understand and to use your FDIC insurance effectively.
First, it is important to know that the basic coverage for FDIC insurance is $100,000 for an individual checking account, $200,000 for a joint account and $250,000 for an Individual Retirement Account (IRA). However there are provisions that would allow a customer to increase their amount of coverage beyond the basic limits, here are some examples based on a family of five.
- A husband and wife both have separate bank accounts in each of their names (each account is covered for $100,000 or $200,000 total).
- The couple also has a joint account which is covered for up to $200,000.
- The husband and wife each have separate IRA Accounts for $250,000 each.
In addition, revocable Payable on Death (P.O.D.) accounts is another option that allows a customer to expand beyond $100,000 in the same bank. For example, all of the following accounts could be insured for one couple at one community bank
- John Doe, P.O.D. to Jane Doe: $100,000
- Jane Doe, P.O.D. to John Doe: $100,000
- John and Jane Doe, P.O.D. to Baby Doe 1, Baby Doe 2, and Baby Doe 3: $600,000
In this case the family listed above would have coverage totaling $1.7 million. This is only a simple example. There are other types of accounts that can further increase your coverage. For more information on this topic speak with a bank representative or visit the FDIC web site at www.FDIC.gov.
Rest assured, since Congress created the FDIC in 1933, the U.S. banking industry has remained on solid ground through the organization’s guarantee of insurance. The FDIC insures deposits at all of the 8,494 banks and savings associations throughout the United States, while at the same time promoting the safety and soundness of these institutions by identifying, monitoring and addressing risks.
