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How Safe Is Your Money in the Bank?

Written by Mint.com
Published Jul 18, 2008
3 min read
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Looking to learn more about personal finance management? Through our partnership with The Motley Fool, we are able to provide you with great money management articles that tackle some of your current financial concerns. If you’re wondering how secure your bank account is in light of the latest news about IndyMac bank, then read on!

In times of market turmoil, it’s good to know at least some of your money is safe.

At least that’s what you used to think, before the FDIC takeover of IndyMac bank hit the news, and we all marveled at the images of long lines of customers waiting to get their money. You might now be asking, “Is my money safe anywhere?”

Here’s something that may surprise you: Most IndyMac customers can still access their money — the ATMs still work, checks are honored, and the branch doors open in the morning. Just because the FDIC takes over your bank doesn’t mean your account is frozen and you’ll have to sell furniture to raise cash.

That’s not to say that there won’t be some people who suffer as a result of IndyMac’s demise. Customers with accounts in excess of FDIC insurance have received only 50% of that excess amount. Whether they get the rest depends on how much the Feds can get after selling off IndyMac, in whole or in pieces.

This is a good time to review exactly what is covered by FDIC insurance. Here’s what you need to know:

Only checking accounts, savings accounts, certificates of deposit, and money market accounts are insured — not stocks, bonds, mutual funds, or money market funds.
Coverage is $100,000 per solely owned account, another $100,000 per person for joint accounts (e.g., you and your spouse could have a fully insured joint account worth $200,000), and $250,000 for IRAs and certain other retirement accounts. So you and your spouse could have a total of $900,000 in FDIC coverage at one bank (two separate accounts, two IRAs, and one joint account). You could throw in even more if you have a trust at the bank.
The coverage is per bank. So you could max out your FDIC insurance coverage at one bank and get duplicate coverage at another FDIC-insured bank across the street. However, it must be a completely different bank — not just another branch of the same bank.

Add it all together, and you probably have more insurance than you thought. But that doesn’t mean you should take a laissez-faire approach to your cash. Once you’ve maxed out your insurance at one bank, move on to another.

To find out if the money in your bank is safe, first make sure your bank is insured, which you can do by using the FDIC’s Bank Find tool. Then, use the Electronic Deposit Insurance Estimator to determine whether your deposits are fully insured. Keep in mind that you only have to run the numbers if the amount of money you have at one bank exceeds $100,000. If your deposits at an FDIC-insured bank are less than $100,000, don’t worry — you’re fully insured.

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