With the $700+ billion bailout bill signed into law, the FDIC now insures more deposits per account holder per bank. Here are the new limits for the most common account types, effective October 3.
- Single accounts are insured up to $250,000 per owner through December 31, 2009
- Joint accounts are insured up to $250,000 per co-owner through December 31, 2009
- IRAs and other retirement accounts are insured up to $250,000 per owner
- Trust accounts are insured up to $250,000 per owner per benficiary
Single and joint accounts will revert to the $100,000 maximum after December 31, 2009 unless a new law is created before then to extend the increased limits.
These increases don’t have much of an effect on everyday depositers like me. It’s unlikely that individuals keep more than $100,000 in a single bank account. These increased limits do help small businesses that need to keep cash on hand to fund payroll accounts and other operating accounts.
Small banks are also boosted by this new law because other businesses may willing to increase deposit balances. More capital available to these small banks can in turn make more cash available for local lending.
The increase may, according to Congress, create more confidence in the safety of the banking system, preventing a massive wave of withdrawals. When people lose confidence in banks, they withdraw their money to keep cash on hand, and the banking industry and the government want to prevent that as much as possible.
Updated October 9, 2016 and originally published October 6, 2008.