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FDIC Limits

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FDIC LimitsRemember when IndyMac failed? There were all those pictures of people lining up to withdraw their money? Back then, the FDIC limits were $100,000 and most of those people had much less than $100,000 in deposit accounts at IndyMac. That meant that everyone in line wasted many hours of their life withdrawing money that was 100% safe (I don’t really blame them, it was a scary time).

The FDIC, created by the Glass-Steagal Act of 1933, provides deposit insurance for your deposits in an FDIC insured bank. Most banks are FDIC insured and you can confirm this using the FDIC bank tool. When a bank fails, the FDIC usually comes in on a Friday and the bank is open for business the following Monday. This has happened hundreds of times, they’ve never faltered from that schedule, and there is no reason to believe they every will… but it doesn’t make it any less scary. (watch what happens when the FDIC shutters a bank, before, during and after – it’s an interesting look into the process)

Current FDIC Limits

What are the FDIC limits? $250,000 per depositor per bank. If you and your spouse share a joint bank account, with both of your names on it, you get $500,000 of coverage. If you have a bank account at two different banks, you get $250,000 at Bank A and $250,000 at Bank B. It doesn’t matter how many accounts you have at a bank, the coverage is for all deposits. So if you have $150,000 in a certificate of deposit and $101,000 in a savings account and the bank goes under, you will lose $1,000.

Before the financial crisis, FDIC limits were $100,000 per depositor per bank but in the wake of all the panic, the limits were increased. Initially, the increase temporary and would only last through 2013. Eventually, the increase was made permanent.

Historical FDIC Limits

Until the recent increase to $250,000 in 2008, the last time the insurance limits were increased was back in 1980. Prior to 1980, the limit was $40,000. Here is a list of all the changes:

  • 1934: $2,500
  • 1935: $5,000
  • 1950: $10,000
  • 1966: $15,000
  • 1969: $20,000
  • 1974: $40,000
  • 1980: $100,000
  • 2008: $250,000

For you inflation minded, $2500 in 1934 (the initial FDIC limit) is worth approximately $42,474.44 today – so our protection limits have exceed the rate of inflation.

If you are with a credit union, the NCUA is the credit union equivalent of the FDIC and the coverage limits are the same.

(Photo: zieak)

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6 Responses to “FDIC Limits”

  1. Shorebreak says:

    When Advanta Bank failed I received a check in the mail, for my funds in a CD, from the FDIC within a few days, including accrued interest. I wish all government agencies were that efficient.

  2. Lee says:

    I’ve never had an account at a failed bank but I understand why those people waited. If all your life savings were in one place, you’d be nervous too no matter the guarantees. Money in hand is still best.

  3. Ray says:

    There’s no guarantee on receiving any interest between when your bank failed and when the FDIC pays you from what I understand.

  4. Jim, help me out here. I thought FDIC insurance was $250k per depositor, per insured bank, per “account ownership category” (e.g., individually owned account, joint account, IRA account). So I thought my spouse and I could get $1.25 million (if we had $1.25 mil :-) ) of FDIC insurance at a single bank if we had:
    - $250k each in two, individually-owned accounts
    - $250k in a jointly owned account
    - $250k each in an IRA account
    Am I mistaken on this?

    • Walt says:

      It’s potentially actually a lot more than that. If your money is in a non interest bearing account, the FDIC coverage is unlimited. If it is in interest bearing accounts, the coverage can still be much higher than 1.25m in one institution if you properly structure your accounts with beneficiaries. Play around with this tool a bit to see for yourself: https://www.fdic.gov/edie/index.html

  5. Correction to my prior post: I thought a jointly owned account could be insured $250k per co-owner, so $500k total, making my + my spouse’s total possible FDIC insurance at a single bank = $1.5 mil.


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