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Home >> Keeping Your Money Safe
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Senior Citizen Worries
I am a worried senior citizen. I have over $200,000 in one bank. Should I spread my accounts over several banks to avoid losing my money if banks begin to fail? How can I quickly, easily, and safely transfer funds from one bank to another?
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Untitled
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Let's set your worries to rest. Let's start by saying that the standard FDIC insurance coverage limit was recently increased to $250,000 per "right and capacity," per depositor, per insured institution (the limit will revert to $100,000 after 12/31/2013). However, deposits can be held in a number of different rights and capacities, and we need to look at each of them.
If all of the funds in the bank are in your name as an individual, you would be insured up to $250,000 and the excess over that amount would be uninsured.
If your accounts are joint accounts and you and the other owners have no other accounts in the same bank, each of the owners will be FDIC-insured up to $250,000, so if there are two of you who own the accounts, each of you will be insured to $250,000 and the balance will be covered to the combined owners' limits of $500,000.
If you don't have a joint account, you can discuss with your banker whether there are other options available to increase your FDIC coverage. For instance, if you have an account that you own, but have designated the account to be payable to a qualified beneficiary (a natural person, or a charity or non-profit recognized under the Internal Revenue Code) upon your death, that account could be separately insured up to $250,000, and multiple accounts for different qualified beneficiaries (or a single account with multiple beneficiaries, if state law permits it) would each have a $250,000 insurance limit per beneficiary. For depositors with more than $1,250,000 in revocable trust accounts and more than five beneficiaries, the coverage is the greater of either $1,250,000 or the sum of all the named beneficiaries' proportional interests in the trusts, limited to $250,000 per different beneficiary.
If circumstances are such that you can't use any of these methods to increase your insurance coverage, you can withdraw excess funds from your current bank in the form of a cashier's check and promptly deposit them in another insured institution. That's the easiest, least complicated way to move the funds. If the funds are in a checking account at your current bank, moving them is even easier. Simply write a check at the new bank, payable to yourself and endorsed, and deposit it there. In most cases, temporarily exceeding the insurance limits at one institution won't cause problems, but you are wise to consider how to obtain and maintain the most coverage available to you.
Note: This page has been updated to reflect the temporary increase in deposit insurance limits. The "standard maximum deposit insurance amount" on FDIC and NCUSIF deposit coverage was increased to $250,000 beginning on 10/3/08. It will revert to $100,000 after 12/31/2013.
Published on BankingQuestions.com 7/16/08
Updated 10/9/08; 6/16/09
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