What the FDIC Insures

The FDIC – Federal Deposit Insurance Corporation – is a U.S. government agency that insures bank deposits in the event of a failure.

Checking accounts, CDs, savings accounts, and money markets accounts are insured for $100,000.

Retirement accounts are covered up to $250,000.

• IRAs
• Section 457 deferred compensation plan accounts
• Self-directed defined contribution plan accounts
• Self-directed Keogh plan (or H.R. 10 plan) accounts

You can be covered for more than $100,000 if you have funds in different account categories: personal account, retirement account, joint account, or revocable trust account.

In a joint account, each account holder is insured for $100,000, so the account is insured for $200,000 total.  Joint savings and joint checking accounts are insured for a total of $200,000.  So, as a couple, you are insured for $100,000 in a checking account and $100,000 in a savings account.

What the FDIC Doesn’t Insure

• Stocks
• Bonds
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities

Any amount over the $100,000 for personal accounts, $200,000 for joint accounts, and $250,00 for retirement accounts is not insured.

When I finally left that bank, I owed more than $600 in fees.  (These were the days when the bank would process a transaction twice and charge non-sufficient funds fees both times.)

I was much smarter with my next checking account at a bank with business days that matched real days.  In 7 years with that bank, I’ve only had 2 overdraft charges, which I got forgiven for being a long time customer.  Here are some tips for managing your checking account and avoiding hefty fees.

• Understand your bank’s fee schedule and know what you can do to avoid fees. Some banks, for example, charge when you make too many withdrawals or when you go below a minimum balance.  If your bank is one of these, save the fees.  Don’t go over your withdrawal limit and keep your balance above the minimum.
• Don’t pay for ATM access to your own money.  Unless your bank refunds ATM fees, avoid using ATMs from other banks.  You’ll likely end up getting charged twice – once from the other bank and once from your own bank.  If your bank doesn’t have any ATMs near you, consider changing banks.  You can also use debit when you purchase inside a store.  You may still get charged, but not nearly as much as if you used an out of network ATM.
• Always know your account balance and don’t spend over it.  Actually, it’s even better if you don’t spend anywhere near your balance.  That way you have a cushion.  If you’re not sure you have enough in your account to cover a purchase, find out first.  Program your bank’s customer service number into your phone so you an easily get your balance.
• Know when your deposits will get credited.  Banks’ business days don’t always follow “normal” business days.  Sometimes a deposit made after a certain time won’t be credited until the next day.  If you’re expecting a deposit to cover a charge, this is something you’ll need to know to avoid an overdraft fee.