Bank Failure - Is your deposit Fully Insured?

[This post is written and copyrighted by FIRE Finance (]

Bank FailureAs big financial institutions crumble and banks fail, it's natural to be concerned about the fate of our hard earned money placed "safely" in the custody of a bank's checking account, savings account, or a certificate of deposit. More often than not we rest assured that our deposits (up to 100k) are FDIC insured.

That is good news, but it still pays to be alert and keep our assets with trust worthy safe keepers. More so, since Alan Blinder (Former Vice Chairman, Federal Reserve) when recently asked about how many more bank failures we're going to see, replied "Probably dozens, if not scores." If a bank fails, it takes time for the FDIC insurance to kick in. Till then we are clueless about the accessibility of our funds.

But what happens if our deposits at a single bank are more than 100k?

This case is more suited for businesses or rich guys who care to stash away tonnes of cash in a bank account. Well, the answer is that we've got to take care of such huge amounts of money by insuring them. Our bank won't do it for us. We quote, Chris Rowe's (a 9-year Wall Street veteran) take on this issue:
You can actually have your deposits insured by the FDIC for up to $50 million. So why isn't this common knowledge? I don't know. But if I were the FDIC I certainly wouldn't be advertising it! Not in THIS market where many more bank failures are widely expected. I don't think the banks want to you to know about it either, because they are charged a fee (and there is zero additional charge to the customer).

There are a few ways to insure your deposits for much more than $100,000.00 other than banking at multiple banks. Two of the best ways are:

1) Using something called the Promontory Interfinancial Network's CDARS (Certificate of Deposit Account Registry Service) which allows you to insure deposits up to $50 million.

2) Finagle your account structures into different "account categories" so the FDIC insures each account category separately, thus significantly increasing the amount insured.
Then Chris goes on to explain in great detail about how we can go about the process of insuring large deposits (greater than 100k). Check it out here.

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Image Source(s): iStockPhoto

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