Are Your Deposits Still Insured?

On January 1, a change in FDIC rules lowered the amount of deposit insurance coverage available on certain large accounts. This not only affects accounts directly covered by the rule change, but could also impact other types of accounts a depositor has at the same bank.

It's important to review your accounts to make sure they are still covered in full by FDIC insurance, particularly if you have a large amount on deposit at any single bank. As a bonus, this also provides a great opportunity to review your checking and savings accounts to make sure you're using the most competitive financial products available.

Checking account rule changes

As one measure to shore up the banking system in the wake of the financial crisis, the Dodd-Frank Act temporarily removed the $250,000 limit on FDIC insurance coverage for non-interest-bearing transaction accounts, a category that includes many checking accounts. The idea was to reduce the potential for a drain on bank deposits by giving customers an added degree of protection.

The Dodd-Frank Act made this expanded coverage effective from December 31, 2010 to December 31, 2012. As a result, as of January 1, 2013, the amount of coverage for those accounts reverted back to $250,000.

How this could also impact savings accounts

Having the coverage limit for non-interest-bearing transaction accounts revert back to $250,000 could mean some loss of coverage for those accounts, but it could also affect savings accounts as well.

During the temporary period of unlimited coverage for certain checking accounts, balances in those accounts were not added to amounts in other types of accounts, such as savings accounts, for the purposes of determining the $250,000 insurance limit. Ordinarily, each depositor is entitled to a maximum of $250,000 in coverage for all deposits at any given bank, regardless of how many accounts the depositor has at that bank.