FDIC increases insurance limits--temporarily
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FDIC increases insurance limits--temporarily

There is good news for small businesses, consumers and other depositors with the increased likelihood they can have more of their deposits or perhaps all their deposits fully insured at their bank.

"Small business owners wanted reassurance that their money would be safe if their banks were to fail. Therefore, Congress temporarily raised insurance limits from $100,000 to $250,000 per depositor," said Eileen St. Pierre, Oklahoma State University Cooperative Extension personal finance specialist.

"Also, no-interest checking accounts and certain other low-interest transaction accounts will be fully insured no matter how much money is in them."

However, these protections last only until the end of 2009. After that, Congress may vote to extend the protection, or let the limit go back down to $100,000.

Many individuals may wonder how he or she will be affected. For the average Oklahoman, St. Pierre said, it really won't affect him or her very much.

"If a person opens a Certificate of Deposit for $150,000, be careful," she said. "If the CD matures after that, only $100,000 of it may be insured if Congress doesn't extend the increased limits after 2009."

The FDIC provides separate insurance coverage for deposits held in different "ownership categories." Under current rules deposits in:

--Single accounts, with one name only, are insured up to $250,000.

--Joint accounts, with two or more people, are protected up to $250,000 per owner.

--Certain retirement accounts, including IRAs, are covered up to $250,000.

--Revocable trust accounts and deposits intended to pass along to named beneficiaries when the account owner dies can be protected up to $250,000 for each named beneficiary subject to specific limitations and requirements.

St. Pierre said if you are thinking about setting up a revocable trust account, talk to your local banker or financial advisor.

For some small businesses operating under a sole proprietorship, there may be questions.

"In that case, this depositor may have both personal and business accounts in the same name or commingled," said Glenn Muske, Oklahoma State University Cooperative Extension interim associate dean, assistant director, family and consumer sciences. "Also, some small business owners have capital needs that may have them exceeding the minimums. In either case, they need to consider maybe using separate banks or having other people named on some of the accounts."

Consumer information can be found on the FDIC Web site at www.myFDICinsurance.gov or call the FDIC at 1-877-ASK-FDIC.


Date: 1/22/09

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