Check Bank and/or Credit Union Covered

You must immediately validate that your bank, whether high street or online, is part of the Federal Deposit Insurance Corporation (FDIC) plan. For credit union a similar safety net program is operated by National Credit Union Administration (NCUA) and provides the coverage as FDIC does for banks.

There are a few ways in which you can validate coverage: -

1. Check your last statement for either FDIC or NCUA emblems.
2. For banks, visit https://www2.fdic.gov/edie/index.html, or for credit unions http://www.ncua.gov/indexdata1.html and use those tools. Have all your bank and/or credit details handy so that can get accurate feedback. I recommend that you print out the information for your records.
3. Call your bank and/or credit union and ask their deposit accounts are covered by FDIC and/or NCUA respectively.
4. The next time you are doing your banking chores, enquire with a live person at the bank and verify coverage.

FDIC and NCUA typically insures checking, savings, money market, and CD accounts. Investment accounts such as stock, mutual fund, and Exchange Traded Funds (ETFs) accounts are typically not covered. So make sure you identify and follow-up on each type of account.

If you do the above steps, it will give you a good assessment of whether your accounts are covered.

Verify Coverage On Deposit Account

As a result of the 2008 credit crisis, FDIC adjusted the insurance limits to $250,000 per person per bank or credit union. Prior to the crisis of 2008, the limits were $100,000 per person. Joint accounts have double the singular coverage, but not always – it’s always wise to check.

This increase was made so as to prevent bank and credit union customers withdrawing their funds at the same time. This, indeed, would make the credit crisis even worse if that is imaginable.

So for example, if you have checking account, savings account, and Certificate of Deposit (CD), the combined total would be covered by FDIC, or NCUA for credit unions, provided the combined total of all accounts does not exceed $250,000. If you have more than $250,000 combined at one bank, the amount over and above could be deemed uninsured.

This is where the potential of loss may come into play so be careful! Use the web tools, given above to determine your exposure for amounts over the FDIC or NCUA insured thresholds.

Also be aware that the increased insurance coverage by FDIC and NCUA is temporary through December 31, 2009. It is possible that it will be extended, but it may not. So keep close tabs on the limits and check government websites given above on a regular basis. Once, again if at the end of this period the limits are adjusted, there is potential of loss depending on your combined balances at each bank or credit union.

Not all types are covered by FDIC or NCUA. Typically investment accounts

FDIC and NCUA Stability

These programs are well funded by the Federal government will be continue that way. So your bank and credit unions are relatively safe provided you meet the thresholds specified.

However, it is not impossible that these insurance funds will run out of funds themselves, especially of bank failures accelerate going forward. Even then it is unlikely that you would lose your money, provided you are within the insured thresholds.

In case of a bank failure, you will still have access to your money, thanks to FDIC and NCUA.

Stay Current on Payments

Do you have to make payments on a loan that you may have from your bank if the bank fails? The answer is a resounding YES! Do not stop making payments as this will have an adverse effect on your personal credit. You don’t want to add to the national or personal credit crisis by assuming payments to the failed bank are no longer necessary. At some point, you will probably get a notice as to whom the new payments should be made. Always keep good records of the payments that you make each month.

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