Comments on: No Reason To Be Above FDIC Insurance Limits

By: Funny about Money

Funny about Money — Sat, 27 Sep 2008 19:42:19 +0000

Whatever would possess you to keep $120,000 in a BANK? Argh.

Okay, if you’re tooooo scared to put it in a mutual fund (where you indeed might lose 20 grand in a serious market crash), then at least split it up and put it in two banks.

And yup. If you have a million bucks and you’re the sort of millionaire who doesn’t take any risk at all, you certainly do divvy it up among 10 banks. More than that, as Jim points out: in a bank whatever interest a hundred-grand deposit earns is at risk.

I have no sympathy. If you’re smart enough to earn and save upwards of a hundred thousand bucks, you’re smart enough to understand the terms that govern the institutions where you keep it. She should just be happy the largest part of her savings were insured; if this were 1929, she’d be out $120,000.

By: Luke @ Money & Fitness

Luke @ Money & Fitness — Sat, 27 Sep 2008 04:33:14 +0000

Jim,
Thanks for the answer. I guess if you have that kind of money in the bank, you can afford to pay fees for that to work.

By: Jackson

Jackson — Fri, 26 Sep 2008 06:10:52 +0000

I wonder what happens to the rich people who use Private Banking options? Do they use some kind of “extra” insurance?

By: TTFK

TTFK — Thu, 25 Sep 2008 21:30:51 +0000

One solution: https://www.difxs.com/DIF/Home.aspx

DIF protects all deposits made at participating Massachusetts-chartered banks with no ceiling.

When DIF was first created in 1934, it was to do the job the FDIC does now. When the FDIC was created, they decided to cover all deposits above the $100,000 limit instead.

By: jim

jim — Thu, 25 Sep 2008 19:20:31 +0000

If you were married, your joint account would have $200,000 of coverage – $100k for you and $100k for your spouse. That would mean only 10 banks.

The rich do have 20 different accounts at twenty different banks but they use intermediary companies to help manage it for them.

By: Luke @ Money & Fitness

Luke @ Money & Fitness — Thu, 25 Sep 2008 18:26:19 +0000

What if you were lucky enough to have 2 million dollars in savings. Do you think the best bet would be to have 20 different accounts at different banks? Hopefully I will have that problem but for those with big money, I’d be curious how they work it with the limit.

By: Stacey

Stacey — Thu, 25 Sep 2008 17:01:09 +0000

I feel sorry for this woman, but it really isn’t fair to compare her loss of money to the government bailout. It’s now the government’s fault that she didn’t understand the terms of FDIC insurance? They promised to cover the first $100k, and they did that. We all need to be responsible for our own finances, although there are some serious flaws in the public’s financial education.

My other question – why did she have $120,000 in a (likely low interest) bank account? I feel that there is a serious problem when people store their life savings in a savings account. Even if you’re risk adverse, what about bonds or TIPS?