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I was reading that FDIC insurance covers accounts up to $250,000. Does this mean each account you have at a bank is insured up to $250,000 or is $250,000 the maximum for all accounts at a bank?
Also, if you reached the maximum at one bank, could you open an account at another bank and be insured for up to $250,000 at each bank?
Thanks
Does this mean each account you have at a bank is insured up to $250,000 or is $250,000 the maximum for all accounts at a bank?
It is maximum of $250,000 across all accounts held by an individual or ownership at a bank. So if you are married you can get a max of $750,000 if you open the accounts as below in the same bank;
For more details read more at FDIC website.
Note: The join account is per unique ownership combination. So if you open another joint account at the same bank with your dad [or mom]; you will get additional cover of $250,000 like wise if you open a joint account with your spouse and dad; its again additional $250,000
Also, if you reached the maximum at one bank, could you open an account at another bank and be insured for up to $250,000 at each bank?
Yes you can do that; and it is separate from your other bank. So if you have 2 accounts at 2 different banks, it would be upto $500,000.
Although most banks are registered for FDIC, it makes sense to check if your bank is covered. More so if you are dealing with a small credit union type of institution.
If you are dealing with a bank then you are interested in FDIC coverage. If you are dealing with a credit Union it is NCUA coverage.
Both NCUA coverage and FDIC Coverage have a $250,000 limit. Both types of institutions have coverage that can exceed the $250K amount if they have multiple account types with that one institution:
What are the basic NCUA coverage limits?*
Single Ownership Accounts (owned by one person with no beneficiaries): $250,000 per member-owner
Joint Ownership Accounts (two or more persons with no beneficiaries): $250,000 per owner (with the primary owner a member of the credit union)
IRAs and other certain retirement accounts: $250,000 per member-owner
Revocable trust accounts: Each member-owner is insured up to $250,000 for each eligible beneficiary named or identified in the revocable trust, subject to limitations and requirements.
Irrevocable trust accounts: Each owner (so long as all owners OR all beneficiaries are members of the credit union) is insured up to $250,000 for each beneficiary named or identified in the irrevocable trust, subject to specific limitations and requirements. Coverdell Education Savings Accounts, formerly education IRAs, are insured as irrevocable trust accounts.
A qualifying eligible beneficiary must be a natural person, or a charitable organization or non-profit entity under the Internal Revenue Code.
*These share insurance coverage limits refer to the total of all shares that account owners have at each federally insured credit union. The listing above shows only the most common ownership types that apply to individual and family shares, and assumes that all NCUA requirements are met.
One important item is that a bank or credit union can have products they sell that don't have the $250K coverage:
What types of accounts are eligible for NCUA insurance?*
NCUA share insurance covers many types of share deposits received at a federally insured credit union, including deposits in a share draft account, share savings account, or time deposit such as a share certificate. NCUA insurance covers members' accounts at each federally insured credit union, dollar-for-dollar, including principal and any accrued dividend through the date of the insured credit union’s closing, up to the insurance limit. This coverage also applies to nonmember deposits when permitted by law.
NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investment or insurance products are sold at a federally insured credit union. Credit unions often provide these services to their members through third-parties, and the investment and insurance products are not insured by the NCUSIF. In locations where these investment and insurance products are offered or sold to members, credit unions are required to disclose that the products:
-- are not insured by NCUA;
-- are not deposits or other obligations of the credit union and are not guaranteed by the credit union; and
-- are subject to investment risks, including possible loss of the principal invested.
In addition, NCUA does not insure safe deposit boxes or their contents.
