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Banking - FDIC
Common Misperception about FDIC Insurance

The Better Business Bureau is joining with the Federal Deposit Insurance Corporation to help correct common false assumptions regarding FDIC-insured bank products. Below are some of the misperceptions that are relayed to BBBs and the FDIC call center:

* The most a consumer can have insured is $250,000. Wrong! Your accounts at different FDIC-insurance institutions are separately insured, not added together, when calculating the $250,000 limit. You might well qualify for more than $250,000 in coverage at each insured bank if you own deposit accounts in different "ownership categories." These categories include checking and savings accounts, retirement accounts, joint accounts and revocable trust accounts. "New Deposit Insurance Limits - The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor. For more information visit http://www.fdic.gov/deposit/index.html - "Deposit Insurance Simplification Fact Sheet"
* Changing the order of names or SSNs on joint accounts can increase the $250,000 coverage. Not so! Rearranging the names listed on joint accounts, changing the order of Social Security numbers or renaming accounts from "Mary and John Doe" to "Mary or John Doe" will have no impact on joint account coverage. The FDIC adds each person's share of all the joint accounts at the same institution and insures the total up to $250,000.
* Deposits in different branches of the same bank are separately insured. Not true! FDIC insurance is based on how much money is in various ownership categories (single, joint, retirement, etc.) at the same insured institution. It doesn't matter if the accounts were opened at different branches, because they are all part of the same bank.
* Any product sold by a bank is insured by the FDIC. False! The FDIC insures deposits, such as checking accounts and certificates of deposit. It does not insure financial products such as stocks, bonds, mutual funds, annuities or other insurance products, even when sold by a bank. FDIC-insured institutions that offer an investment product to a customer are required to disclose that the product is not FDIC-insured and is subject to investment risk.
* If a bank fails, the FDIC has up to 99 years to pay depositors for their insured accounts. Complete nonsense! Scam artists trying to sell "financial" products sometimes use this myth to convince bank customers that they are wasting their time to place trust in FDIC-insured products. In fact, federal law requires the FDIC to pay the insurance deposits as soon as possible after an insured bank fails.

To read about other common misperceptions regarding FDIC-insured accounts, visit the FDIC Web site at www.fdic.gov.

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