Higher FDIC Deposit Guarantee Extended to 2013

Humberto Cruz

I walked into the bank lobby to deposit a check the other day and saw a big sign meant to reassure customers about Federal Deposit Insurance Corporation protection.

Unfortunately, the sign actually misled them.

"Deposits guaranteed by FDIC up to $250,000," it said in big blue letters. Then in smaller black type: "Through Dec. 31, 2009."

Which got me thinking: If banks are giving out wrong information, no wonder so many people don't know about the new law.

I am talking a law Congress approved May 19 extending the $250,000 FDIC insurance limit through Dec. 31, 2013. Previously, at the height of the economic crisis last October, lawmakers had temporarily increased the basic limit on FDIC coverage from $100,000 to $250,000 per depositor per insured bank through Dec. 31, 2009.

Despite this important new action by Congress, I have seen at least a dozen news articles in print and online afterwards - not to mention three bank newspaper ads and now the sign at my bank - still giving the old and now erroneous expiration date.

"Consumers who like the safety and security of federally insured certificates of deposit will be interested in the new law," said Jay Rosenstein, an FDIC spokesman who contacted me about publicizing the extended deadline.

I'm happy to do so because, overshadowed by almost around-the-clock news about the ailing auto industry, the extended FDIC protection authorized by Congress received relatively scant media attention at the time. I've also gotten several e-mails and letters from readers with more than $100,000 in bank CDs who thought they would lose FDIC coverage after Dec. 31. These readers, unaware of the deadline extension, were ready to cash some of their CDs even if it meant taking an early withdrawal penalty.

But with the extended deadline, "if you (or your family) have $250,000 or less in all of your deposit accounts at the same insured bank, you don't need to worry about your insurance coverage - your deposits are fully insured through at least 2013," says the Spring 2009 issue of FDIC Consumer News, the agency's quarterly newsletter for consumers.

As the newsletter points out, you may actually qualify for more than the basic insurance coverage at one insured bank because the FDIC provides separate insurance coverage for deposits held in different "ownership categories" such as single accounts and joint accounts (and also custodial accounts). For detailed information about FDIC insurance coverage limits, I encourage you to go to the Web site www.myfdicinsurance.gov or call the FDIC toll-free number 877-275-3342.

Also, certain retirement accounts, including bank IRA deposits, will continue to be protected separately up to $250,000 even after 2013 because that is the permanent coverage limit previously set by Congress for these accounts in 2006, the newsletter explains. (You can read the free and informative FDIC newsletters online by doing a search for FDIC Consumer News at the www.fdic.gov Web site. You can also request a free printed copy by calling the same toll-free number 877-275-3342. The current issue also includes helpful tips on protecting yourself from foreclosure frauds, "easy money" schemes and other costly deals, including misleading ads for seemingly high-interest CDs that are actually a ploy to promote the high-pressure sale of risky, non-insured products).

As to FDIC coverage after 2013, while I'm not in the prediction business I expect there will be intense consumer pressure to make the higher limits permanent, or at least give depositors plenty of warning if the limit is to revert to $100,000 after 2013.

Personal Finances - Higher FDIC Deposit Guarantee Extended to 2013