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Answer:
Dear
BuyandHolder,
Answer: If your bank account is federally insured by the Federal Deposit Insurance Corp. (FDIC), then it is safe. The insurance cap is typically $100,000, with some exceptions which are explained below. But even if your money is not fully insured, you might get it back if your bank fails, although this is not guaranteed.
A live example...
Let’s look at what happened when federal regulators closed Florida’s First Priority Bank earlier this month.
The FDIC, the receiver of the failed bank, arranged for another bank, in this case SunTrust Bank, to assume the insured deposits of the failed bank. That enabled all of the branches of the failed First Priority Bank to reopen (within a day or so of the closing) as branches of SunTrust.
Thus, insured First Priority depositors automatically became insured SunTrust depositors.
However, the failed bank had about 840 accounts that exceeded the federal insurance cap of $100,000. Those accounts were worth about $13 million and people holding them are waiting to gain access to their money. That’s because the uninsured accounts are being credited over time as the FDIC sells them to healthy banks.
FDIC bank account coverage...
Obviously it’s best to have only $100,000 in one bank. But there are some exceptions.
1) In addition to an individual account which is insured up to $100,000, you can also have a joint account in which up to $200,000 is insured. Your joint account can be with a spouse, a child or anyone else.
2) In addition to $100,000 in an individual account and $200,000 in a joint account, up to $250,000 in a regular or Roth IRA account is federally insured.
Therefore, if your bank fails and you have three different types of accounts (up to $100,000/individual, up to $200,000/joint and up to $250,000/IRA), all $550,000 will be FDIC-insured.
About the procedure...
When FDIC regulators determine a bank can’t meet its obligations and declares it insolvent, the FDIC temporarily takes over the bank, removing the in-place management.
Although the FDIC runs the bank, it does so only for a short time, while auctioning off its assets -- for the best price -- to another bank. This change in ownership usually takes place over a weekend. (That was the case with the Florida bank described above.)
If the FDIC cannot find a bank to buy the insolvent institution’s assets, then the FDIC mails checks to those account holders who are within the federal insurance limits. Interest is paid right up until the night the bank is closed.
About your account...
The FDIC web site (www.fdic.gov) has a calculator that will tell you how much of your money at any one bank is insured.
You might also like to read my column on protecting your bank account from rising fees and penalties. Click HERE to read.
Good luck!
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