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FDIC Insurance: Do You Know As Much As You Think You Know?
Misconceptions: A Top 10 List
To help depositors avoid repeating the mistakes of others, FDIC Consumer News has compiled this "Top 10" list of misconceptions that some people have about FDIC insurance. This list is based on discussions with FDIC deposit insurance specialists, including representatives at our toll-free Call Center, which handles hundreds of calls a month from consumers asking about their deposit insurance.
Misconception Number 1: The most a consumer can have insured is $100,000.
Too many people assume — often incorrectly — that if their bank fails their share of all their accounts would be added together and insured up to a combined total of $100,000. Others have notions even further from the truth, such as the idea that the FDIC knows how much each customer has in every bank in the United States (rest assured, we don't) and that the grand total of all those accounts is insured to no more than $100,000. The reality is that your accounts at different FDIC-insured institutions are separately insured, not added together, and you may qualify for more than $100,000 in coverage at each insured bank if you own deposit accounts in different "ownership categories."
Suppose you have a variety of accounts at one bank. The funds you have in various checking and savings accounts (other than retirement accounts) in your name alone are insured up to $100,000. Your portion of joint accounts — those with other people — is also separately insured to $100,000. If you also have "revocable trust accounts" at the bank, the total can be separately insured up to $100,000 for each beneficiary if certain conditions are met. (See "misconception number 8.") And, under new rules, certain retirement accounts are insured up to $250,000, up from $100,000 previously.
"Depending on the circumstances, a family of four could have well over $1 million in deposit insurance coverage at the same bank," said James Williams, an FDIC Consumer Affairs Specialist. "And that coverage is separate from what is protected at any other FDIC-insured institution."
FDIC Consumer News is published by the Federal Deposit Insurance Corporation
FDIC Consumer News is produced quarterly by the FDIC Office of Public Affairs in cooperation with other Divisions and Offices. It is intended to present information in a nontechnical way and is not intended to be a legal interpretation of FDIC or other government regulations and policies. Mention of a product, service or company does not constitute an endorsement.
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Last updated on 5/09/2006