$250,000 FDIC and NCUA Insurance Limits Permanent

Email  Print Print  

The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) has gotten a lot of press lately because it represents the biggest reform of Wall Street in quite some time. While the pundits will surely be debating the strengths and weaknesses of the bill, what it went too far on and what it erroneously avoided, one part of the bill touches each and every one of us in a meaningful way – deposit insurance limits.

For years, the FDIC and NCUA insurance limits were set at $100,000. During the economic crisis, this protection limit was raised to $250,000 (in October 2008) to help assuage the fears of many Americans who “ran” on their banks, not realizing in many cases it was the run itself that killed the bank. The limit was raised to $250,000 temporarily, set to expire by 2013, but the Wall Street Reform and Consumer Protection Act, signed on July 21st, 2010, has made this limit permanent.

In fact, the act made the limit retroactive to January 1st, 2008 to the benefit of 9,000 depositors who had more than $100,000 at banks that failed between January and October 2008.

It will be interesting to see how the other parts of the bill play out in the wild.

{ 8 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

8 Responses to “$250,000 FDIC and NCUA Insurance Limits Permanent”

  1. cdiver says:

    This was long overdue. There are also banks participating in the FDIC’s Transaction Account Guarantee Program which insures 100% of the balance in checking and now accounts earning less than .25%.

    • cdiver says:

      While most people would never have more than $250k siting in a checking account at any one time, if you do find yourself in this situation you may wich to look for this extra protection.

  2. KP says:

    I know people who previously were deliberate about titling their accounts for more protection must be ecstatic about this change being made permanent.

  3. tbork84 says:

    Since I don’t see myself in this type of situation (over or anywhere near the old limit of $100k) any time soon. I wonder what it means to me in terms of whether the FDIC is already collecting more from banks in order to cover this increase in depositor’s insurance.

    • cdiver says:

      The rates for FDIC coverages skyrocketed two years ago since it has been having to pay out with all the bank failurs.

    • cubiclegeoff says:

      I was thinking the same thing. Although I’m glad that the limit has become a bit more reasonable, even if I won’t have that amount in a bank any time soon.

  4. Quinton says:

    Check out other programs if you happen to have more than $250,000..

    Certificate of Deposit Account Registry Service (CDARS)

    If you like the safety and convenience of CDs and you’re nearing the FDIC limit, you may want to consider the CDARS program if your bank offers it.

    Funds above $250,000 are deposited in CDs at other banks in the network. The system is supposed to ensure the money is divided among non-related banks, but you should check to be certain. If you’re wealthy enough, you can insure up to $50 million.

    The demand for the CDARS program has grown considerably this summer, according to Mark Jacobsen, president of Promontory Interfinancial Network, the company that created CDARS.

    “Since mid-July, we’ve been doing about twice the business each week as we did in a typical week in January; and about three times the transaction volume we were doing a year ago. Our business in California has skyrocketed. It took us about five-and-a half-years to garner approximately 150 bank charters in California as member of our network. In the 11 days after IndyMac failed, we had requests from 40 different banks.”

    IDC Deposits

    Just as the CDARS program divvies your excess funds among CDs at different banks, IDC Deposits does the same with money market accounts. Its network consists of over 250 banks, allowing individuals to have FDIC coverage for up to $5 million in what’s called a MMAX account.

    Another way MMAX is similar to CDARS is that the interest rate you earn may not be as good as you would get shopping around and placing your funds in various institutions yourself. But there’s a huge convenience factor to consider. With both programs you receive one statement and one 1099 for tax records.

    For example, IDC currently pays banks 2 percent on deposits. The bank you do business with may give you an interest rate of 1.75 percent. That’s apparently not stopping people from going with the program.

    “We are absolutely seeing an increase in business,” says IDC Deposits president Kim Weeks. “I’ll be the first to tell you that six months ago, four months ago, it was a tougher sell on the investor side because these are not great rates and we understand this. But because of everything going on right now, there’s a trade-off in the convenience and the assurance that the money is insured.”

  5. FlyFisher says:

    Good to know, and I think a wise move. Question for anyone knowledgeable: If someone does have more than $250k they want in an accessible, insured account can they just open multiple accounts at different banks?

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.