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Answer:
Dear
BuyandHolder,
I'm
delighted to be able to give you some good news about
the complicated bailout plan. It has to do with your
savings. As you know, it's critical to have at least
three month's worth of living expenses in a money
market fund, bank savings account or bank CDs. But
it's even more important now, as the stock market
remains turbulent.
On
October 3, President Bush signed the Emergency
Economic Stabilization Act of 2008 which temporarily
raised the limit on FDIC bank deposit coverage from
$100,000 to $250,000 per depositor. The increase is
scheduled to return to $100,000 per depositor after
December 31.
The
FDIC chairman, Sheila Bair, explained: "The
temporary increase in deposit insurance should go
far to help consumers maintain confidence in the banking
system."
Caution:
The insurance coverage for retirement accounts was
not increased.
What
is the FDIC?
The
Federal Deposit Insurance Corp. is an independent
federal government agency founded in 1933 because
so many banks failed in the late twenties and early
thirties.
It
insures deposits (savings accounts and certificates
of deposit) of member banks & thrift institutions.
It has two sources of funding: premiums paid by member
banks and thrifts and earnings it receives from its
investments in US Treasuries. It does not receive
money from Congress. Nor does it insure securities
or mutual funds offered to the public by banks or
thrifts.
As
we go to press, banks pay an average assessment of
6.3 basis points to the FDIC in order to cover deposits.
A basis point is the equivalent of one cent for every
$100 in a savings account.
On
Tuesday of this week, the FDIC proposed doubling the
member bank assessment so as to have a sizeable fund
should other lenders fail.
EDIE
To
make certain that all your money in a given bank is
insured and that you're not over the limit, check
with EDIE, The Electronic Deposit Insurance
Estimator. You'll find EDIE at www.FDIC.gov.
Click on "Consumer Resources." This calculator spells
out how much of your money at any one bank is insured
and how much, if any, has exceeded the limits.
What's
covered
It's
obviously prudent to have only $250,000 in one bank
per depositor. But there are some nice exceptions.
1)
In addition to an individual account which is insured
up to $250,000, you can also have a joint account
in which up to $500,000 is insured ($250,000 each).
Your joint account can be with a spouse, a child or
anyone else.
2)
In addition to $250,000 in an individual account
and $500,000 in a joint account, IRA deposits are
insured up to $250,000 per plan depositor.
3)
Accounts that are registered in a Living Trust
are insured up to $250,000 per owner, per beneficiary.
So,
based on the increased FDIC coverage, here's how you
could insure up to $1.5 million:
Account
Owner Account
Balance
-----------------------------------------------------------------------------------
Dick's savings account & CDs $250,000
Jane's savings account & CDs $250,000
Dick & Jane joint savings account $500,000
Dick, Trustee for Jane $250,000
Jane, Trustee for Dick $250,000
TOTAL
DEPOSITS INSURED: $1,500,000
Bottom
line
If
all your money is not insured, you should move the
uninsured amount to another FDIC-insured institution.
To find the highest yielding bank savings account
in the country, check with www.bankrate.com.
Good
luck!
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