Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Kim Lankford, a Contributing Editor for Kiplinger's Personal Finance Magazine, to talk about FDIC Insurance and failing banks. Kim, with this bank in crisis, people are really nervous. Do we have reason to fear for our money in federally insured banks?
Kim Lankford: Well, actually the FDIC is a bit concerned as well. They just hired a lot of new employees expecting that there might be some more trouble.
Kevin McCormally: Well, how does FDIC insurance work?
Kim Lankford: Well, the good thing is, as long as you stay below the FDIC limits then you are safe that even if your bank fails, you have all of that money as covered.
Kevin McCormally: Okay, remind me what are those limits?
Kim Lankford: Well, as long as you have $100,000 or less in one bank then you are fine. If you have more than that, it all depends on what types of accounts you have. You have up to $100,000 in coverage for single accounts, up to $100,000 for your share of joint accounts and up to $ 250,000 for most retirement accounts.
Kevin McCormally: So, we think about $100,000 limit but you just gave an example of $450,000. But what happens if you have more than the limit amount and your bank fails?
Kim Lankford: In that case, you may get some money back depending on how the FDIC can get some of those assets from the bank, distribute them after they fail.
Kevin McCormally: Okay, I know that, that bank failed last year, what happen in that case?
Kim Lankford: Well, that is a great example of how the FDIC can work. The bank failed on Friday and immediately people had a 100% of their insured deposits plus 50% of their uninsured deposits shifted over to ING. They had access to that money all weekend and the website came back up on Sunday.
Kevin McCormally: What's happened since then?
Kim Lankford: Well, since then the FDIC has been able to recover even more assets. Over the last few months, they've made a few more payments of the uninsured assets and now people have about 77% of their uninsured assets.
Kevin McCormally: Okay Kim, bottom line, if you are close to or over the limit, what should you do?
Kim Lankford: Well, even though you could get back more money form the FDIC, it's best just to stay within those limits. And a really easy way if you are coming close to those limits is to just open an account at another bank, shift some of your money over there because you have a whole new set of limits there.
Kevin McCormally: Thank you very much, Kim.
