FDIC Deposit Insurance Back to $100,000 Limit in 2013
February 24, 2010
Of all the moves that were made by the federal government to avert a complete collapse of the banking system in 2008, possibly the most important was the decision by the FDIC to raise the limit on deposit insurance from $100,000 to $250,000.
The FDIC insurance pledge protects money market accounts, CDs, savings accounts, checking accounts, and certain retirement accounts. Basically, the U.S. government guarantees that if accounts of those types are jeopardized by the failure of a particular bank, the U.S. government covers the damages.
The FDIC has a ton of credibility with savers because not one single saver has ever lost money in an FDIC-insured deposit account since the creation of the FDIC in 1933. In fact, this high level of safety is one reason why so many conservative investors are still choosing to invest despite the low interest rates being paid on those accounts at this time.
It is likely that if the FDIC had not covered these larger account balances, droves of savers would have pulled their funds out of banks in a panic, which would have been utterly disastrous for banks as well as for investors.
As of now, the FDIC raise to cover $250,000 per depositor per institution is a temporary deal. The limits are set to return to $100,000 per depositor per institution in 2013.
While 2013 may seem far away now, anyone who has been living through these early years of the 21st Century can attest to the speediness with which the years fly by. It will be interesting to see whether the FDIC actually lets the higher limit insurance expire or not.
Certainly this is a development savers will want to keep a sharp eye on.
