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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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FDIC's Fall 2010 Consumer News: Avoiding Scams, FDIC Coverage Changes, Estate Planning


FDIC's Fall 2010 Consumer News: Avoiding Scams, FDIC Coverage Changes, Estate Planning

The FDIC just released its Fall 2010 Consumer News. Some excerpts that I thought would be useful to highlight include:

  • Can You Spot a Scam? - This article in quiz format has some useful tips on things like verifying that a cashier's check is legitimate and in your liability if your debit card and ATM card is stolen. Here is what is mentioned regarding confirming a cashier's check:
    your best strategy is to contact the bank the check is drawn on or take the check to your bank's branch manager (to contact the other bank on your behalf) to have the check authenticated.
  • What to Know About the New Law Affecting FDIC Insurance Coverage - If you're a regular reader of this blog, you know about these changes, but it's a good basic overview:
    The basic standard maximum deposit insurance amount has been permanently increased from $100,000 to $250,000. [....] A new, temporary insurance category will fully insure all funds, regardless of the dollar amount, in checking accounts that pay no interest.
  • Estate Planning and Banking: How to Protect Money for Your Heirs in FDIC-Insured Accounts - This is a basic overview of POD accounts, Living trust accounts and Irrevocable trust accounts with a focus on how they "can be used to pass funds on to heirs and explain how to make sure your money is fully insured if your bank fails."
  • Having Difficulties Paying Your Mortgage? Pay Attention to These Tips - Article describes "refinancing opportunities and loan modifications available through the federal government's Making Home Affordable program."
  • Weighed Down by Debt? Here are Ways to Ease the Load - Useful tips for those dealing with debt collection companies.
  • Credit Protection: Understand the Costs, Limitations and Alternatives Before You Buy - The best tip in this article in my opinion is this:
    If life or disability insurance is too costly or you are ineligible for the coverage for health reasons, you might consider establishing an emergency savings account funded by the money you would have paid for credit protection.
  • Student Loans: What's New, What's Important - Here's one thing that has change:
    In the past, borrowers received federal student loans from banks and other financial institutions. Under a new law that went into effect July 1, 2010, all federal student loans will be provided directly from the government through the financial aid office at the post secondary institution the student is attending.
  • Happy Returns: Tips for Saving Money at Tax Time - There's not much in this article for savers. It just has a few tips like avoiding refund anticipation loans and being on guard against tax-related frauds.

Please refer to my August post for highlights of the FDIC's Summer 2010 Consumer News.

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Anonymous   |     |   Comment #1
Does this mean that Reward Checking Accounts are not FDIC insured even though the bank states it is a member of the FDIC.
pearlbrown   |     |   Comment #2
@Anonymous #1, I must be overlooking the material which suggests that reward checking accounts are not currently covered.   

The FDIC is clear in the last second of the second paragraph:  "For the purpose of these [insurance coverage] rules, the term "savings deposits" includes NOW accounts, money market deposit accounts and other interest-bearing checking accounts."  http://www.fdic.gov/deposit/deposits/FactSheet.html

I see RCAs as interest-bearing checking accounts which pay a higher interest rate contingent on the depositor meeting certain requirements (ex:  direct deposit, x number of debit transactions, E-statements, etc) and which are therefore are already covered by the FDIC (within the customary $250,000 limit and taking into account the account ownership category calculations). 

Ken, do you have a different take on this?

KenBDG   |     |   Comment #3
Reward checking accounts are treated like any interest checking account in terms of FDIC insurance coverage.

I think the confusion may be due to the new temporary coverage for non-interest checking accounts. These accounts have unlimited coverage. That's the second coverage change that I referenced above in this consumer news article:

"A new temporary insurance category will fully insure all funds regardless of the dollar amount, in checking accounts that pay no interest."
Rosie43   |     |   Comment #4
These no interest accounts are what lawyers may use temporarily for money held in escrow, or for settlements or companies may use them for payroll, or stores for  their daily deposits until it is transferred. Some may have several 100's of thousands of dollars on any given day. Friday's are payday for a lot of companies that use these accounts and that is the day that banks go under. Many of these accounts cannot by law pay interest.