LevonP
10-19-2008, 03:51 PM
Interesting article from The Salt Lake Tribune: http://www.sltrib.com/business/ci_10755339
It's only a temporary fix.
With the government taking unprecedented action to assuage public fear, the rules of account insurance coverage have been rewritten.
But well-publicized government moves are temporary, intended to help ease the credit crunch. (For the most up-to-date information, which can change quickly, check with the organizations I list.)
For example, you probably know that Congress this month raised the basic Federal Insurance Deposit Corp. protection on bank accounts from $100,000 to $250,000 per depositor per insured institution.
But - none of you who wrote to me seemed to realize this, and new bank ads I have seen fail to say it - the insurance limit is slated to go back to $100,000 after Dec. 31, 2009.
''This is even the case for customers who set up long-term certificates of deposit,'' explained David Barr, an FDIC spokesman. For example, opening a two-year or longer CD for more than $100,000 today will not extend the insurance limit beyond $100,000 after year-end 2009.
Similarly, the basic insurance limit on National Credit Union Administration protection was raised to $250,000 but reverts to $100,000 after Dec. 31, 2009.
With FDIC and NCUA coverage, you can combine account registration categories (for example, single and joint accounts, retirement and trust accounts) to protect well in excess of $250,000. For specific rules, the latest information and to make sure your bank or credit union is insured, check with the FDIC at 877-275-3342 or online at www.fdic.gov, or with the NCUA at 800-755-1030 or www.ncua.gov. Both FDIC and NCUA are government agencies backed by the full faith and credit of the U.S. government.
The FDIC also insures ''brokered CDs,'' which are certificates of deposit issued by member banks but sold through brokerage houses. When buying a brokered CD, ''make sure you know from which bank it is, whether the bank is FDIC insured and whether you already have existing deposits with that bank'' that may push you beyond the insurance limit, said Greg McBride, senior financial analyst for Bankrate.com in North Palm Beach, Fla.
With the higher $250,000 limit, ''an investor needs to buy only from four banks to get $1 million of FDIC insured money,'' said Tom Ricketts, CEO of Incapital, a global investment banking firm with U.S. offices in Chicago and Fort Lauderdale (but keep in mind the higher limit is good only through Dec. 31, 2009).
Also, when calculating your insurance limit, you must total all identically registered accounts you own in the same bank, cautioned Lewis Altfest, a certified financial planner in New York City. Some readers believed incorrectly they could open an unlimited number of accounts at the same bank as long as each one had a different account number and was under the insurance limit.
Another temporary protection is the backing of money market mutual funds by the government. The U.S. Treasury is guaranteeing the $1-dollar-a share price of any publicly offered eligible money market mutual fund that pays a fee to participate in the guarantee program.
All major money market funds, including those from fund giants Fidelity, Vanguard and T. Rowe Price, are participating. Investors cannot choose or decline to participate. Coverage is limited to the number of shares an investor owned as of the market close on Sept. 19.
The program will run until Dec. 18. The secretary of the Treasury has the authority to renew it up through Sept. 18, 2009. For additional information, check news releases at the Treasury's Web site, www.ustreas.gov, particularly the frequently asked questions at www.treas.gov/press/releases/hp1163.htm. If you have questions, you can e-mail them to moneymarketfunds- guaranteeprogram@do.treas .gov.
It's only a temporary fix.
With the government taking unprecedented action to assuage public fear, the rules of account insurance coverage have been rewritten.
But well-publicized government moves are temporary, intended to help ease the credit crunch. (For the most up-to-date information, which can change quickly, check with the organizations I list.)
For example, you probably know that Congress this month raised the basic Federal Insurance Deposit Corp. protection on bank accounts from $100,000 to $250,000 per depositor per insured institution.
But - none of you who wrote to me seemed to realize this, and new bank ads I have seen fail to say it - the insurance limit is slated to go back to $100,000 after Dec. 31, 2009.
''This is even the case for customers who set up long-term certificates of deposit,'' explained David Barr, an FDIC spokesman. For example, opening a two-year or longer CD for more than $100,000 today will not extend the insurance limit beyond $100,000 after year-end 2009.
Similarly, the basic insurance limit on National Credit Union Administration protection was raised to $250,000 but reverts to $100,000 after Dec. 31, 2009.
With FDIC and NCUA coverage, you can combine account registration categories (for example, single and joint accounts, retirement and trust accounts) to protect well in excess of $250,000. For specific rules, the latest information and to make sure your bank or credit union is insured, check with the FDIC at 877-275-3342 or online at www.fdic.gov, or with the NCUA at 800-755-1030 or www.ncua.gov. Both FDIC and NCUA are government agencies backed by the full faith and credit of the U.S. government.
The FDIC also insures ''brokered CDs,'' which are certificates of deposit issued by member banks but sold through brokerage houses. When buying a brokered CD, ''make sure you know from which bank it is, whether the bank is FDIC insured and whether you already have existing deposits with that bank'' that may push you beyond the insurance limit, said Greg McBride, senior financial analyst for Bankrate.com in North Palm Beach, Fla.
With the higher $250,000 limit, ''an investor needs to buy only from four banks to get $1 million of FDIC insured money,'' said Tom Ricketts, CEO of Incapital, a global investment banking firm with U.S. offices in Chicago and Fort Lauderdale (but keep in mind the higher limit is good only through Dec. 31, 2009).
Also, when calculating your insurance limit, you must total all identically registered accounts you own in the same bank, cautioned Lewis Altfest, a certified financial planner in New York City. Some readers believed incorrectly they could open an unlimited number of accounts at the same bank as long as each one had a different account number and was under the insurance limit.
Another temporary protection is the backing of money market mutual funds by the government. The U.S. Treasury is guaranteeing the $1-dollar-a share price of any publicly offered eligible money market mutual fund that pays a fee to participate in the guarantee program.
All major money market funds, including those from fund giants Fidelity, Vanguard and T. Rowe Price, are participating. Investors cannot choose or decline to participate. Coverage is limited to the number of shares an investor owned as of the market close on Sept. 19.
The program will run until Dec. 18. The secretary of the Treasury has the authority to renew it up through Sept. 18, 2009. For additional information, check news releases at the Treasury's Web site, www.ustreas.gov, particularly the frequently asked questions at www.treas.gov/press/releases/hp1163.htm. If you have questions, you can e-mail them to moneymarketfunds- guaranteeprogram@do.treas .gov.