FDIC standard maximum deposit law

Starting on January 1st, 2013, federal law stated that funds deposited in a noninterest-bearing transaction account will no longer receive unlimited deposit insurance coverage by the Federal Deposit Insurance Corporation (FDIC).

This means that all of a depositor’s accounts at an insured depository institution, including any noninterest-bearing transaction accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount. The current standard is about $250,000, for each of the ownership categories for deposit insurance.

For larger depositors, this means that they have to split up their deposits into several different banks.

“Most individual savers keep their money in interest-bearing accounts, where since the crisis the insurance coverage was raised to $250,000 from $100,000. Some families have gotten around the insurance limit by dividing money into separate $250,000 accounts under the names of different family members.” 

And according to the New York Times, when the banks were given insurance for these unlimited deposit accounts, the amount of money rose in these accounts by over 70 percent ($678 billion).

For those using smaller banks, this increases the chances of them failing. There is general belief that if a larger bank were to fail, the government would step in to ensure that it would not with bank bailouts.

For more information on what this means for you and your deposits, give us a call at (414) 273-1144 or use our web submission form.