Paul Sanchez
If you have more than $250,000 in the bank, you may want to consider your options for insuring all your money. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per institution, and per ownership category at member banks. However, there are strategies to ensure your funds are covered if you have more than this amount. One option is to open an account at a second FDIC-member bank, or to structure your accounts across multiple ownership categories, such as individual and joint accounts. Additionally, certain accounts, like retirement accounts and revocable trust accounts, may offer further insurance coverage. For even higher levels of protection, you can explore private insurance funds or reciprocal deposit networks that distribute deposits across multiple institutions.
| Characteristics | Values |
|---|---|
| FDIC insurance coverage limit | $250,000 per depositor, per institution, and per ownership category |
| FDIC-insured accounts | Checking, savings, money market, certificates of deposit (CDs), negotiable order of withdrawal (NOW), cashier's checks, money orders |
| Non-FDIC-insured accounts | Stock and bond investments, mutual funds, life insurance policies, annuities, municipal securities, safe deposit boxes, Treasury bills, bonds, and notes |
| FDIC insurance coverage categories | Single, joint, retirement (IRAs), revocable trust, irrevocable trust, corporation, partnership, unincorporated association, employee benefit plan, government |
| MaxSafe account FDIC coverage | Up to $4 million per accountholder by distributing deposits across community bank charters |
| Depositors Insurance Fund (DIF) | Private insurance beyond FDIC coverage, offered by about 70 banks in Massachusetts |
| NCUA insurance at Columbia Credit Union | At least $250,000, similar to FDIC, with higher amounts based on account ownership and structure |
| Joint account NCUA insurance | Up to $500,000 ($250,000 per account owner) |
| IRA NCUA insurance | Up to $250,000 |
| Trust account NCUA insurance | Up to $250,000 |
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What You'll Learn
Open an account at a second FDIC member bank
If you have more than $250,000 in the bank, you may want to consider opening an account at a second FDIC-insured bank. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per institution, and per ownership category at member banks. This means that if you have more than $250,000 in one bank, your money may not be fully protected in the event of a bank failure.
By opening an account at a second FDIC-insured bank, you can get an additional $250,000 of insurance coverage. This is a straightforward way to ensure that your money is fully protected. You can also consider opening multiple accounts within different ownership categories at the same bank, such as individual and joint accounts, to maximize your coverage.
It is important to note that FDIC insurance covers various account types, including checking, savings, money market, and certificate of deposit (CD) accounts. However, it does not cover stock and bond investments, mutual funds, life insurance policies, or safe deposit boxes, among other things. Additionally, FDIC insurance only applies to deposit accounts, so be sure to consider other forms of insurance for your valuable possessions.
To confirm if a bank is FDIC-insured, you can search the FDIC database or look for the official FDIC sign displayed at the bank. This sign indicates that the financial institution is backed by the FDIC's guarantee of financial safety and security. By taking these steps, you can ensure that your money is protected even if you have more than $250,000 in the bank.
In addition to FDIC insurance, you may also want to explore other options for further protecting your funds. For example, you can look into private insurance funds, such as the Depositors Insurance Fund (DIF), which offers additional coverage beyond the FDIC limit at select banks. By combining FDIC insurance with other insurance options, you can tailor a comprehensive plan to safeguard your financial assets.
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Add a joint owner to your account
Adding a joint owner to your bank account is a simple and common process, but it's important to be aware of the potential risks and benefits before making any changes. Firstly, it's worth noting that adding a joint owner will provide them with equal access to your account, meaning they can deposit and withdraw funds without your permission. Therefore, it's crucial to carefully consider who you add to your account and ensure that you both agree on rules around spending and contributions.
If you decide to proceed, the process of adding a joint owner will depend on your bank. For example, Bank of America requires all current account owners to schedule an appointment at a financial center, bringing valid government-issued IDs. If you are adding a spouse, you will also need to bring your marriage certificate. Other banks may have different requirements, so it's important to check with your specific bank.
It's also worth noting that, in addition to updating your current account, you may also be able to open a new joint account with the added owner. This could be a beneficial option if you want to keep your existing account separate for any reason.
Furthermore, adding a joint owner can provide additional benefits in terms of insurance coverage. The Federal Deposit Insurance Corp. (FDIC) insures up to $250,000 per depositor, per institution, and per ownership category. By adding a joint owner, you create a new ownership category, effectively doubling the insurance coverage on your account to $500,000.
However, it's important to be aware that removing someone as a joint account holder can be more complicated and may require the permission of the person being removed. Therefore, it's essential to carefully consider the decision to add a joint owner and fully understand the potential implications.
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Open a MaxSafe account
If you have more than $250,000 in the bank, you may want to consider opening a MaxSafe account to ensure your funds are protected. MaxSafe is a program offered by Wintrust that allows individuals or entities to increase their Federal Deposit Insurance Corp. (FDIC) coverage from the standard $250,000 to $4 million per accountholder.
Here's how it works: Wintrust distributes your deposits across more than a dozen community bank charters, similar to how the IntraFi Network operates. By spreading your deposits across multiple banks, MaxSafe provides an additional layer of protection for your funds. This means that even if one bank fails, your money is still safe because it's held in multiple institutions.
To open a MaxSafe account, there is a minimum deposit requirement of $1,000. There is no minimum monthly balance requirement or monthly service fee associated with the account. MaxSafe accounts include CDs (certificates of deposit) and money market accounts.
By utilising a MaxSafe account, you can maximise your FDIC insurance coverage and gain peace of mind knowing that your funds are protected up to a much higher limit. This option is particularly attractive if you have a substantial amount of money in the bank and want to ensure it is all insured in case of any unforeseen bank failures or issues.
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Open an account with a credit union
If you have more than $250,000 in the bank, you may want to consider opening an account with a credit union. Credit unions are not-for-profit organisations that offer many of the same types of accounts as banks, often with better-than-average interest rates and lower fees.
To open an account with a credit union, you need to be a member. Membership requirements vary, with some credit unions limiting membership by region or employer, while others have more relaxed criteria. The National Credit Union Share Insurance Fund, established by Congress in 1970, insures credit union members' accounts for up to $250,000 per person, per institution, and per ownership category, similar to FDIC insurance at banks.
When choosing a credit union, look for one that offers National Credit Union Administration (NCUA) membership. Credit unions with NCUA membership must display the official sign at their branches and on their websites, indicating that they provide insurance coverage. Additionally, you can use the NCUA's Credit Union Locator tool to confirm if a credit union is federally insured.
Once you've found a suitable credit union, you can open an account and take advantage of the insurance coverage they provide. Credit union members are automatically covered by the Share Insurance Fund, which insures individual accounts up to $250,000 and combines all joint accounts for coverage up to $250,000 per member. The Share Insurance Fund also separately protects retirement accounts like IRAs and KEOGHs up to $250,000.
By opening an account with a credit union, you can rest assured that your funds are insured and protected, even if you have more than $250,000 in the bank.
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Open an account at a different financial institution
If you have more than $250,000 in the bank, you may want to consider opening an account at a different financial institution. Here are some things to keep in mind when doing so:
First, it's important to understand the FDIC insurance limits. The Federal Deposit Insurance Corporation (FDIC) insures deposits of up to $250,000 per person, per institution, and per ownership category at member banks. This means that if you have more than $250,000 in a single account at one bank, your funds above that limit may not be insured.
One option to insure more than $250,000 is to open an account at a second FDIC-member bank. By spreading your funds across multiple institutions, you can ensure that your deposits are insured up to $250,000 at each bank. Keep in mind that different branches of the same bank count as a single institution for FDIC purposes, so you'll need to open an account at a completely different bank to increase your insurance coverage.
When choosing a second bank, consider the types of accounts offered and whether they meet your financial needs. For example, you may want to look for a bank that offers high-yield savings accounts, money market accounts, or certificates of deposit (CDs) to maximize your returns while insuring your deposits.
Additionally, you can explore banks that offer additional deposit insurance beyond the FDIC limits. For example, some banks provide coverage through the Depositor's Insurance Fund (DIF), which is a private insurance fund that insures deposit amounts beyond the FDIC coverage without a limit. About 70 banks offer DIF coverage, and they are all based in Massachusetts.
Another option is to look for banks that partner together to form reciprocal deposit networks, such as the IntraFi Network. In this model, your deposits to one financial institution can be split between multiple institutions, increasing your FDIC coverage limit. For example, if your deposit is held among 10 different banks, your FDIC coverage limit increases tenfold to $2.5 million.
By opening an account at a different financial institution and considering additional insurance options, you can effectively insure more than $250,000 and protect your financial assets.
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Frequently asked questions
The FDIC (Federal Deposit Insurance Corporation) insures up to $250,000 per depositor, per institution and per ownership category. If you have more than this amount, you can open an account at a second FDIC member bank or credit union, or add a joint owner to your account, which puts it into a new ownership category.
FDIC insurance covers checking and savings accounts, money market accounts, certificates of deposit (CDs), negotiable order of withdrawal (NOW) accounts, and cashier's checks or money orders issued by the bank.
FDIC insurance does not cover stock and bond investments, mutual funds, life insurance policies, annuities, municipal securities, safe deposit boxes and their contents, and Treasury bills, bonds, and notes.
