The recent shutdown of NetBank is a good opportunity to review what happens when a FDIC insured bank closes and gets taken over by another bank. Basically, you’re safe, as long as your deposits didn’t exceed $100,000. [Kiplinger]

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  1. TechnoDestructo says:

    So that FDIC insurance…that’s 100,000 PER ACCOUNT? If you were to hit 100,000 on one insured account, you could just start another insured account and it would all be covered?

  2. joeblevins says:

    See I told you I was right by not having $100k.

  3. nweaver says:

    Its $100K per person named on the account totaled over the entire bank.

  4. target_veteran says:

    Yes, but where does that money come from? It’s great that these people have money and can get on with their lives, but this isn’t the money these people deposited. That money was invested, used to pay employees, used as security against loans, etc.

    This is inflation at work.

  5. Crim Law Geek says:

    @nweaver

    I could be wrong, but I think it’s actually $100K per person named across all banks. So if you have $100K in Bank A and $100K in Bank B and both close, you will only get $100K.

  6. ColoradoShark says:

    @thirdgen: It is definitely not across all banks. Each bank is counted separately. Search the internet for stories about rich folks who want a lot of money (much more than 100K) safely in CDs. There are services that split the money into less than 100K packets and opens a bunch of CDs at a bunch of different banks.

  7. BK88 says:

    FTA: You’re safe as long as you have less than $100,000 in one
    bank, and you might have higher limits depending on the types of
    accounts you have there. You have a $100,000 FDIC limit for single
    accounts, $100,000 for your share of joint accounts, and up to $250,000
    for certain retirement accounts. Those limits are for each bank. If you have a lot more money, you can get more FDIC coverage by spreading your deposits among several banks. For more information, see the Are My Deposits Insured? page at the FDIC Web site.

  8. ColoradoShark says:

    @nweaver: If you open an account and put your spouse as co-owner (probably some other fancy pants language) and your spouse opens an account and puts you as co-owner, each account gets 100K coverage.
    Now, go out there, save 200K, put it in a bank this way that is about to fail and test it for me please.

  9. RogerDucky says:

    Not all banks. Per non-affiliated bank.

    That is to say, if you put money in bank #1 and affililate #2 (e.g. Bank of Bob and Bank of Bob, Kentucky) then you only get $100k if both closes.

    However, if you placed $100k in Bank of America and Washington Mutual, and both died horrible deaths, then you get $200k back from FDIC.

    @TARGET_VETERAN: Yes, it’s “inflation,” but it also ensures that bank runs don’t happen. By having FDIC insurance, there’s less chance of causing a chain-reaction in bank closings as people panic when a few banks go under and withdraw all their savings from the banks that haven’t closed yet.

    Remember: Everyone withdrawing money from a bank at the same time will, most likely, bankrupt a bank.

  10. RogerDucky says:

    @TARGET_VETERAN: FDIC insurance is there for two purposes:

    1. Lets people keep their money if the banks fail.
    2. Ensures that there is no chain-reaction bank failure caused by panic-induced bank runs.

    Remember: Banks will most likely go bankrupt if everyone withdrew all the money they “have at the bank” all at once.

  11. mac-phisto says:

    let’s get things a little straight here – some people are little off-target.

    it’s $100K per depositor & an additional $250K on qualifying retirement accounts. your insurance could exceed $100K provided you know how to structure accounts to maximize your protection.

    [www.fdic.gov]

    & don’t forget credit unions are also insured by ncua w/ essentially the same rules.

    [www.ncua.gov]

  12. Crim Law Geek says:

    @Mac-Phisto

    National Credit Union Administration, quite the party people!

  13. Timbojones says:

    The programmer at the desk next to mine had about $200K in a Netbank account when it went under. They had just sold a house and bought another and the money was in transit.

    Ouch!