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Trick to Getting FDIC Insured Over $100K

I dropped by an Indymac branch in San Marino, CA today to see what was going on.

I arrived with popcorn and soda, HOPING to see either a frenzied bank run or a bloody riot, but the bank was actually closed…

Many customers were confused about the details of FDIC insurance limits. I was confused too, so I did some research online.

IMPORTANT: Opening Different Types of Accounts at the Same Bank Doesn’t Work
A common myth is that if you have $100K in a CD, $100K in a savings account, and $100K in a checking account, then all $300K is insured. This is wrong.

“You cannot increase FDIC insurance by dividing funds owned in the same ownership category among different accounts. The type of account – whether checking, savings, certificate of deposit, or outstanding official check such as a cashier’s check, or other form of deposit – has no bearing on the amount of insurance coverage.” (source:ZionsBank)

How to Get FDIC Insurance on $100K+ at the Same Bank
The trick is to open accounts with different legal ownerships. The typical types of ownership are:

  • Single / Individual Ownership Accounts – Only you can withdraw your money.
  • Joint Ownership Accounts – Your or your spouse can withdraw money.
  • Testamentary (Payable on Death) Accounts – Your beneficiary (usually your kids) can withdraw money when you die.

Single ownership accounts are insured up to $100K.
Joint accounts are insured up to $200K (because they required 2 people to open).
Testamentary accounts are insured up to $100K.

Example: Getting FDIC Insured on $400K at the Same Bank

  • Open a individual account with $100k
  • Open a joint account w/ someone you trust with $200K
  • Open a payable on death account with $100K

That’s how it works. Be smart about where you put your money!

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Comments (51)
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51 Existing Comments
  1. Joe said:
    on February 3rd at 10:27 pm

    Bob, You are a very ignorant and angry individual. The sub-prime mortgage crisis is not Bush’s fault nor the Republicans fault. The idea that “Everyone deserves to own a home” (even those that can’t afford it) is not a Republican idea or ideal, it’s that of the Democrats/Liberals like yourself. That along with corporate greed and what should be considered outright illegal behavior on the part of CEOs has brought this mess upon us. Until this machine that is the US economy learns how to police itself this type of thing will happen again and again.