What is the current insurance limit offered by the Federal Deposit Insurance Corporation on bank deposits, and how can I find out my bank’s stability and whether my accounts are safe there?

—K. Slawson, Oro Valley

I frequently hear this question from depositors and family members. Everyone wants to know if their money is safe at the bank. The two primary issues to consider when evaluating the security of your money are whether your bank is a member of the FDIC, and how your bank’s financial health and stability are rated within the financial community.

In May 2009, President Obama signed the Helping Families Save Their Homes Act in an attempt to stabilize the nation’s housing and financial markets. The legislation temporarily increased the standard maximum deposit insurance amount from $100,000 to $250,000 per depositor through Dec. 31, 2013. Since then, the maximum deposit insurance amount of $250,000 per depositor has become permanent.

Additionally, in order to provide some level of comfort and safety to businesses during the recession, the FDIC implemented the Transaction Account Guaranty Program, which provided unlimited coverage on low interest and non-interest bearing checking accounts. This FDIC program is expiring on Dec. 31, 2010, but will be extended by the Dodd-Frank Act through Dec. 31, 2012.

A major difference between the two programs is that the new program will not cover low-interest rate checking accounts; only those that are traditional non-interest bearing checking accounts will have unlimited coverage. However, this coverage is in addition to the $250,000 standard coverage per depositor.

Regardless of whether your account is at a large or small bank, your money will be safe if that institution is FDIC-insured, and if you maintain the total amount per depositor within the FDIC’s prescribed limits.

You can go to the FDIC website – www.FDIC.gov – to check your limits with the “Edie the Estimator” service. Edie will calculate your FDIC insurance coverage for each bank where you have deposit accounts. After a few minutes of processing, a printable report lets you know whether your deposits are within or exceed coverage limits.

A number of independent bank rating firms such as BauerFinancial – www.bauerfinancial.com – also monitor the stability of the nation’s financial institutions. The firm’s mission statement points out that “no institution pays for its rating, nor can it be eluded.” I highly recommend visiting this website and researching how your bank measures up.

Fred Dawson, Jr. is the executive vice president and chief credit officer at Commerce Bank of Arizona, a locally owned community bank specializing in serving residents and small to mid-size businesses in Arizona. Fred may be contacted at fdawson@commercebankaz.com or 520-321-0402. Please submit your banking and finance questions for consideration for future articles to nmiller@explorernews.com

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