Reader question: Can I have more than $250,000 at one FDIC-Insured Bank and still be fully covered?

by Nick on August 3, 2010

I have added a very basic contact me function to this blog. I’m still trying to figure out how to set it up to be a little easier on the eye and not have to go to another site and come back (you get redirected automatically), but this is as far as my tech-challenged self can get right now. I’ll figure it out slowly. Anyhow – to the substance.

A reader contacted me with a question and while this site does not give financial advice to individuals, I’m happy to provide general answers to basic questions based on my knowledge and some research – see here for more details about what this site is all about.  I also like the motivation that this question could give to other readers, so let’s get to it!  The reader’s “problem” certainly is one many of us would like to have – potentially too much money to deposit into a bank and still be insured!

After reading some of my writings about Ally Bank’s 5-year CD with only a two-month early withdrawal penalty, the reader looked into it further and decided it was right for him too. I talked about me opening an account at Ally here.

But the reader has more than $250,000 to deposit – which is above the current FDIC-insurance limit. He asked if there was a way to have more than $250,000 at Ally and still be fully insured. The short answer is good news for him – it is possible. Because I do not know the particulars of the reader’s situation, I’ll talk a bit about how the FDIC insurance works generally, using some knowledge and information directly from the FDIC’s FAQ’s. You can check them out at your leisure.

As you can see, it is possible to have more than $250,000 of coverage at one insured bank if you own deposit accounts in different ownership categories. Examples of “ownership categories” are single accounts, joint accounts, revocable trust accounts and certain retirement accounts.  So there you go!  Check back later for a little deeper discussion into FDIC limits based on this reader’s inquiry.

Congratulations to the reader for saving up enough money to have this problem! He must have put his credit card down and stepped away from the mall quite a few times to save up that much! Now if he wants to make sure he’s fully insured he should look into splitting his money between banks or, if at one bank, ownership categories. What advice do you have for him?

Let’s all strive to get there someday!  Step one – put your credit card down and slowly step away from the mall!

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