I still see still some confusion about the standard maximum deposit insurance amount. For those who haven't been following this issue closely, I can understand the confusion. The standard maximum deposit insurance amount used to be $100,000. This limit existed for quite a while, and many thought that an increase was long overdue. When the financial crisis hit, and one positive thing that came out of the crisis was an increase to this limit from $100,000 to $250,000. However, at first this new $250,000 limit was only temporary. It was scheduled to return to $100,000 after 2013. The temporary aspect of this was worrisome for those with long-term CDs.
The worries about the $250,000 limit being temporary finally went away in July 2010 when the president signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The FDIC stated the following in its press release (emphasis is mine):
On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000. The standard maximum insurance amount of $100,000 had been temporarily raised to $250,000 until December 31, 2013. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.
The temporary increase from $100,000 to $250,000 was effective from October 3, 2008, through December 31, 2010. On May 20, 2009, the temporary increase was extended through December 31, 2013.
"With this permanent increase of deposit insurance coverage to $250,000, depositors with CDs above $100,000 but below $250,000 will no longer have to worry about losing coverage on those CDs maturing beyond 2013.
This also applied to credit unions. Here's what the NCUA stated on its consumer website (read this overview of share insurance coverage):
On July 22, 2010, Congress permanently increased NCUA's standard maximum share insurance coverage to $250,000.
So for both banks and federally insured credit unions, your deposits are covered to at least $250,000, and by current law, there is no end date for this coverage.
Over $250,000 in Deposits
Your deposits over $250,000 may be federally insured. One thing that has been confusing is the temporary unlimited FDIC insurance for certain transaction accounts. According to this FDIC consumer news:
under the Dodd-Frank financial reform law enacted last July, certain checking accounts that pay no interest will benefit from full deposit insurance coverage — regardless of the dollar amount — during the two years from December 31, 2010, through December 31, 2012.
This was intended to ease the concerns of businesses who may have millions of dollars in transactional accounts that are used for things like payroll. With this program, the chance of bank runs should be reduced. I have more details on this program in this December 2010 post.
You can also qualify for over $250,000 in deposit insurance based on FDIC ownership categories. This is NOT temporary. One easy way to extend your coverage is with beneficiaries. I have more details in my post Maximizing Your FDIC Coverage with Beneficiaries.
What Would Happen if Dodd-Frank is Repealed?
There has been a lot of talk about repealing Dodd-Frank. If the entire law is overturned, would that affect deposit insurance? I assume that regardless of who wins the presidency it would be very unlikely that all parts of Dodd-Frank would be repealed. I assume that most all politicians will understand that it makes no sense to overturn the part of Dodd-Frank that covers deposit insurance.