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The Honolulu Advertiser
Posted on: Thursday, April 20, 2006

It pays to know how much of your bank deposits are protected

By Michelle Singletary

These days, having your bank account insured by the federal government is comforting.

That's because it's rare to see a bank fail and many depositors don't have enough in their accounts to even come close to going over the insurance protection limits if their bank should go under.

If you have amassed a significant amount of money and it's in an institution insured by the Federal Deposit Insurance Corp. or the National Credit Union Share Insurance Fund, do you really know how much of it is protected?

Probably not and I wouldn't fault you if you didn't. Even some bank employees get it wrong, as one reader suspected.

"On several occasions at several different banks I have been told that the limit on insured accounts for my wife and I is a total of $200,000 irrespective of 'ownership categories,' " the reader wrote. "Specifically, I have been told that my wife and I could have a single account insured for $100,000 each, but that opening another joint account would not extend the insurability of our deposits beyond that combined $200,000."

There has been a heightened interest in deposit insurance coverage because, for the first time in 25 years, the limit for retirement savings accounts was increased to $250,000, up from $100,000, effective April 1. That news left many of my readers with questions about the new limits and the old ones.

To help answer these questions, I asked the FDIC. To those who wanted to double-check, the basic insurance limit for deposits in banks, thrifts and credit unions is still $100,000 per depositor per insured institution.

So what about the reader who was told that the insurance coverage for him and his wife was limited to $200,000?

That information was incorrect, according to Kathleen Nagle of the FDIC's division of supervision and consumer protection.

Perhaps we all need to take the following to the bank:

  • Single accounts are insured up to $100,000 per person per insured bank. Single accounts are deposit accounts that you set up in your name alone. In the case of the reader, he can have one or more single accounts totaling up to $100,000, and his wife can have single accounts totaling up to $100,000, at the same bank, and the accounts would be fully insured, Nagle pointed out.

  • One or more joint accounts owned by a husband and wife at the same bank are insured up to $200,000, provided all co-owners have equal withdrawal rights and personally sign the account signature card (unless the account is a certificate of deposit). Joint accounts are insured up to $100,000 per co-owner, separately from any single accounts that co-owners may have at the same bank.

    So a husband and wife could have up to $400,000 in FDIC insurance coverage at the same bank simply by placing the money into three deposit accounts $100,000 in his name alone, $100,000 in the wife's name alone, and $200,000 in a joint account for the two of them.

    For more information go to www.fdic.gov or call (877) 275-3342.

    You may never have to worry about relying on the government insurance for your deposit accounts, but you never know. And since you don't know, take the time to determine how much of your money is protected.

    Contact Michelle Singletary at singletarym@washpost.com.