About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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The $250,000 Standard Maximum Deposit Insurance Amount is Permanent

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 (Winter 2010/2011):

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.

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  |     |   Comment #2
You know what is worse than making assumptions about the rationality of politicians, imo.  It's certain consumers who "down" a politician or politicians for "that horrible Dowd-Frank Act" and they have NO idea what is in it!!  There "are" a handful of politicians who try to do their job and to **** all of them for those we dislike is truly unfair, imo.  A certain party who lives with me fits in this category and has had to spend time actually "reading" the Act so that party will learn a lesson from rash judgements.
  |     |   Comment #7
#2 - Maybe the 'party' that lives wth you has a  different take on "who will learn the lesson'?  Or, do you not allow the live-in partner to have an independent opinion?
  |     |   Comment #8
#7  Excuse me but "independent opinions" belong to people who take the time to research what they are giving opinions about.  Don't tell me negative things about a politician or a Bill unless you have at least taken the time to get information about it.  Sorry if I take my life this seriously but more sorry for those who don't.  Have a good day.
  |     |   Comment #10
#8, sounds like you need to get a different 'partner', or vice versa?
  |     |   Comment #11
#10:  You should be so lucky to find a "partner" like me!  My partner could not afford to replace me.  We have the best of both worlds and we decided who would be in charge by "who" had the best financial skills and the desire to do the tremendous work it takes to make things work out for us.  Guess who won out?  ME!  Thanks for caring. :)
  |     |   Comment #3
Don't the politicians read all the legislation before voting "aye or nay"?
  |     |   Comment #4
NO.  Nancy Pelosi said, concerning the ObamaCare Bill:  "We have to pass this bill in order to see what's in it."

Logic would tell any intelligent person to read and understand a bill BEFORE voting for or against it.  'Doesn't work with politicians.
  |     |   Comment #5
No, politicians don't read every piece of legislation, nor should you expect them to.  Similarly, Bill Gates doesn't read every line of Windows computer code and the Chairman of GE doesn't  study the technical specs and blueprints for evey jet engine or nuclear reactor GE builds.  But they both have to sign off on the final product.

That's why Congress has committees.  Generally, the committee members and the expert staff they hire write and debate on legislation and then send their recommendations to the floor.  Most routine legislation is passed based on the committee's report.  Not every Congressman is expected to be an expert on everything from marine wildlife management to tax policy.  When a particular issue becomes a political football is when Congressman from outside the committee pay attention to it.

  |     |   Comment #6
So why don't we eliminate the congress and let Bill Gates make the decisions on what the commitees and staff experts recommend?
  |     |   Comment #9
"When a particular issue becomes a political football is when Congressman from outside the committee pay attention to it."

That's the problem with Congress.  By then it's TOO LATE!

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