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What Happens When the Increased FDIC Insurance Limits Expire?

Written by Nickel - 17 Comments

Update: The higher FDIC limits have been extended through 2013.

Earlier this fall, FDIC insurance limits increased from $100k to $250k. But guess what? That increased FDIC coverage is set to expire on 12/31/2009. Thus, assuming that these changes aren’t extended or made permanent, the coverage limits will fall back to their original values in just over a year. With that in mind, a reader named Dale recently asked the following question:

If I get a five year certificate of deposit (CD) for more than $100k (but less than $250k), will this CD be covered in full for the full five years by the FDIC? Or will the extended coverage expire in Dec 2009?

That’s a great question. Unfortunately for Dale, his CDs will only be protected by the higher limits until the end of December 2009. At the point, the coverage will fall back to $100k. According to an FDIC press release:

“…all the deposits a consumer has at a bank in his or her name alone will be fully insured up to $250,000 through December 31, 2009. After that date, the depositor will only be insured up to $100,000, with any balance over that limit becoming uninsured.”

Expanding your FDIC limits

The good news is that you can actually stretch your limits beyond the basic coverage amounts by employing additional ownership categories. Because coverage is determined on a “per depositor” basis, jointly held accounts qualify for twice the coverage. On top of that, accounts held in different ownership categories are separately insured.

In light of the above, it’s actually possible for a married couple to protect up to $1M at a single bank — i.e., they can individually hold $250k apiece plus a join account of $500k. Even after the coverage limits revert to their previous levels, they’ll be left with $400k in protection ($100k apiece plus $200k in a joint account).

Published on December 9th, 2008
Modified on January 4th, 2010 - 17 Comments
Filed under: Banking

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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17 Responses to “What Happens When the Increased FDIC Insurance Limits Expire?”

  1. 1
    Dylan Says:

    A couple can further increase their FDIC coverage by each opening single name accounts that are “payable on death” to the other. That’ll give them $1.5 million ($600,000 under old limits).

  2. 2
    Trevor Says:

    Yea. Dylan is right.

    Great informational post though. Sure taught me some new things.

  3. 3
    Blue Owl Finance Says:

    The options of additional ownership categories and adding beneficiaries to the account are ways to extend the FDIC coverage. However, if any little of the paperwork is mistitled or mishandled, then the additional coverage could be voided.

    The easiest way to secure up to $50 million is coverage to deposit your money into a bank that participates in the CDARS program.

  4. 4
    Craig Says:

    Very interesting, didn’t think about it because I have no reason to, not in that type of league. For a single person, wouldn’t it just be easier to have separate accounts for 100K to make sure there won’t be a problem?

  5. 5
    nickel Says:

    Craig: You’d have to have separate accounts at different institutions for this to work. The limits are per account holder per institution, so just opening multiple accounts at one bank doesn’t help unless they have different ownership types.

  6. 6
    Craig Says:

    Nickel: Got it, thanks, wasn’t sure how exactly that worked. Wished I was in a position where that would be an issue, ha.

  7. 7
    Tim Says:

    watch out for subsidiaries

  8. 8
    Nick Says:

    I think the idea behind the expiration, is that consumer confidence will return, and the banks will be in better shape, so that the FDIC won’t really be a concern on most peoples minds, as it wasn’t really before the current recession.

  9. 9
    Edward Sedawie Says:

    How can a not for profit organization get around the $250,000.00 limits on the FDIC coverage?

  10. 10
    Mark Says:

    Edward – a non-profit (and any consumer) can open a bank account in any bank in Massachusetts that is a member of the Depositers Insurance Fund (DIF) that accepts non-resident accounts. These accounts are insured in unlimited amounts above and beyond the FDIC-insured ceiling.

  11. 11
    mildred rein Says:

    As of january 1, 2010, WHAT IS THE FDIC bank insurance limit??? I have seen contradictory ststements.

  12. 12
    Nickel Says:

    mildred: The coverage limits are the same as for 2009. See here:


    The higher rates are good through 2013.

  13. 13
    John Says:

    I want to err on the conservative side and assume that the $250K limit will expire in 2013. I have a credit union relationship that I want to expand. My personal account is comprised of 1) a “share account” with a few hundred dollars and a 2) CD for $100k.

    To ensure I receive full FDIC coverage, I called the credit union and inquired about openning two new CDs…one jointly between myself and son #1 and a second between myself and son #2. When I inquired if the sons would need individual accounts (i.e., “share” accounts), I was told, “No.” The new joint CDs can evidently be openned without the boys having a share account. BUT I WONDER, would FDIC coverage apply to just me as the “share account holder/member” or would “we” be covered to a full $300k, assuming that each CD contains $100k? Hoping the question is clear and appreciate any guidance. Thanks.

  14. 14
    jim bob Says:

    Who the hell puts that much money in a savings account. You don’t even outpace inflation with the crap interest rates that even the best savings accounts offer. Much better off investing. Especially since the dollar keeps tanking. And you could invest in anything and be better than a damn savings account.

  15. 15
    ChrisCD Says:

    BTW, a house panel voted to make the $250K increase permanent along with making it retroactive to 1/1/2008. This would help bail out those that lost money from the ANB and IndyMac FDIC closures.

  16. 16
    Ross Says:

    If the account MM, CD or other owned by the trust it is my understanding that it is protected by $250,000 x the number of trustees.. For example: The trust owns the accounts and has 5 trustees.. therefore 1.25 mil is insured is that correct? Ross

  17. 17
    pfb Says:

    So lets say 500k needs to be fdic insured.
    a person can open two accounts (checking,savings)
    at wells fargo for example, Do the same thing at chase
    and one checking account at citibank. then entire sum is
    effectively insured by fdic?

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