FDIC coverage

[Deleted]

We had our quarterly chat with our financial advisor today.  Part of the conversation is always about current financial news, economic forecasts and such. 

The really sad thing our advisor said today was that, since the SVB collapse, he's been reviewing his clients' cash holdings and contacting the ones with ones with bank accounts containing more than the FDIC-insured amount. He said almost all of them said, no they don't want to diversify where their cash sits; they believe any losses due to bank failure would be covered by the Federal government like it was for the SVB customers.  

I'm not a gambler, but if I were, I would prefer casinos and racetracks to betting on the mood of Washington politicians at any given moment in time. 

[bean29]

I have seen some stories on the internet where they indicate that the rot in the banking system extends into numerous banks.  If multiple banks fail at the same time, how far can the FDIC Guarantee extend?

Our $$ are with Chase which is supposed to be one of the safer banks, and we don't have more than $250,000 there, but still, I am nervous.  

Those customer have nerves of steel.

[jerseygirl]

Apr 5, 2023 9:18:18 GMT -5 bean29 said:

I have seen some stories on the internet where they indicate that the rot in the banking system extends into numerous banks.  If multiple banks fail at the same time, how far can the FDIC Guarantee extend?

Our $$ are with Chase which is supposed to be one of the safer banks, and we don't have more than $250,000 there, but still, I am nervous.  

Those customer have nerves of steel.

Easy the government just prints more money
HaHa

[resolution]

Really they should have indexed the 250k to inflation. I am usually pretty skeptical about socialism for the rich and capitalism for the poor, but idk how small businesses can keep under the FDIC limit and still meet payroll and all their other expenses.

[Annie7]

A stupid question - does this 250K apply to retirement portfolio too or just cash? All my retirement accounts are at Fidelity.

[ken a.k.a OMK]

No. The FDIC insures bank accounts, not investment accounts in stocks and bonds.

[Tiny]

Apr 5, 2023 13:29:37 GMT -5 Annie7 said:

A stupid question - does this 250K apply to retirement portfolio too or just cash? All my retirement accounts are at Fidelity.

It might be a little complicated...

Fidelity is not a bank and brokerage accounts are not FDIC-insured, but uninvested cash balances are eligible for FDIC insurance. Balances above $5 million may be placed in a non-FDIC insured money market fund, which earns a different rate.

FWIW: FDIC insurance doesn't cover the money you have invested in stocks or bonds.
I'm not sure how it works with Money Market Accounts or Money Market Funds.   I suspect you can easily check your mm account/fund to see if it's covered by the FDIC insurance or not.... 

I'm biased and only partially paying attention to all of this, as I wish I was wealthy enough to have 250K NOT invested...

I'm not sure how this effects people who have their tax advantaged retirement accounts with a specific bank 
(a friend has an IRA with CDs in it  at Name Brand Bank.... they may also have some money invested in Stocks and bonds that are offered by the Name Brand Bank...)   

[Deleted]

Apr 5, 2023 13:40:36 GMT -5 Tiny said:

Apr 5, 2023 13:29:37 GMT -5 Annie7 said:

A stupid question - does this 250K apply to retirement portfolio too or just cash? All my retirement accounts are at Fidelity.

It might be a little complicated...

Fidelity is not a bank and brokerage accounts are not FDIC-insured, but uninvested cash balances are eligible for FDIC insurance. Balances above $5 million may be placed in a non-FDIC insured money market fund, which earns a different rate.

FWIW: FDIC insurance doesn't cover the money you have invested in stocks or bonds.
I'm not sure how it works with Money Market Accounts or Money Market Funds.   I suspect you can easily check your mm account/fund to see if it's covered by the FDIC insurance or not.... 

I'm biased and only partially paying attention to all of this, as I wish I was wealthy enough to have 250K NOT invested...

I'm not sure how this effects people who have their tax advantaged retirement accounts with a specific bank 
(a friend has an IRA with CDs in it  at Name Brand Bank.... they may also have some money invested in Stocks and bonds that are offered by the Name Brand Bank...)   

We keep $75,000 cash more or less in our local bank divided between checking and savings, each of which are insured up to the $250,000 FDIC limit.  We have another $65,00 or so in cash in IRA's and non-sheltered accounts with Merrill Lynch which is also covered.  If we kept over $250,000 in cash with anyone, they could create enough different accounts with various CD's and such that we would stay under the limits.  Personally, I can't imagine having that kind of $$ not invested in equities, but different strokes for different folks.  Heck, I have a neighbor who keeps Krugerands in her safety deposit box

[nittanycheme]

Apr 5, 2023 17:32:57 GMT -5 soupandstew said:

Apr 5, 2023 13:40:36 GMT -5 Tiny said:

It might be a little complicated...

FWIW: FDIC insurance doesn't cover the money you have invested in stocks or bonds.
I'm not sure how it works with Money Market Accounts or Money Market Funds.   I suspect you can easily check your mm account/fund to see if it's covered by the FDIC insurance or not.... 

I'm biased and only partially paying attention to all of this, as I wish I was wealthy enough to have 250K NOT invested...

I'm not sure how this effects people who have their tax advantaged retirement accounts with a specific bank 
(a friend has an IRA with CDs in it  at Name Brand Bank.... they may also have some money invested in Stocks and bonds that are offered by the Name Brand Bank...)   

We keep $75,000 cash more or less in our local bank divided between checking and savings, each of which are insured up to the $250,000 FDIC limit.  We have another $65,00 or so in cash in IRA's and non-sheltered accounts with Merrill Lynch which is also covered.  If we kept over $250,000 in cash with anyone, they could create enough different accounts with various CD's and such that we would stay under the limits.  Personally, I can't imagine having that kind of $$ not invested in equities, but different strokes for different folks.  Heck, I have a neighbor who keeps Krugerands in her safety deposit box

Splitting it into different accounts doesn't multiply the coverage.  The FDIC adds up all the cash accounts together.  you could possibly have one under one spouse and one under the other spouse and have it work that way, but:

Does FDIC cover multiple accounts at same bank?
The FDIC adds together all single accounts owned by the same person at the same bank and insures the total up to $250,000.

I actually do have cash that comes close to that amount if you add it all up- mostly because the money I inherited when my mom passed is still mostly in cash since I'm keeping it separate, and I really just haven't done much with it except put it into some in I-bonds or CDs (CDs are with the same online bank, and fall under the same FDIC).  The CDs are earning really good interest now.  DH's and I "real" money is in a different bank, so that keeps me under the limit.