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More than $250,000 in a bank account in the US? - Things you should know

Through the Federal Deposit Insurance Corporation (FDIC) deposit insurance, consumers can confidently place their money at insured banks across the country knowing it is backed by the full faith and credit of the United States government.  Currently, the standard insurance amount is $250,000 per depositor, per insured bank for each ownership category.

Strategies for more than $250,000 in the bank

  •  Open an account at different bank
    • It's a good practice to have more than 1 bank account because for whatever reason you can't get to your primary bank, you have options.  Also, many different banks can offer different benefits and perks.  For example,
      • Chase is one of the largest and probably most trusted bank with historic roots to JP Morgan.  Not a lot of benefits and perks, but there are many locations and perceived safety
      • Bank of America, another large institution with many locations offers a Museums on Us Program where participating Museums provide complementary access on the first full weekend of the month 
      • Citibank has CitiGold benefits that include $200-$400 of rebate on subscription services like Amazon Prime, Costco, Spotify, Hulu, TSA Pre or Global Entry.  They also have a Culture Pass with complimentary access and discounts to museums and performing arts.  I believe there is also a CitiBike promotion for those in New York City
      • HSBC offers Premier.  There may not be a lot of locations but has the best platform for international banking including no wire or foreign transaction fees and the ability to open up accounts in other countries.
  • Open different account at same bank
    • below are the details from the FDIC website: 
      • for those married can open account for spouse to add another $250,000 
      • joint accounts, each combination of owners and institutions will qualify for another $250,000, so married couples can open an account for each person and a joint qualifying 3 separate accounts up to $250,000 each making $750,000

FDIC Insurance Coverage Limits

  • Open a brokerage account
    • like FDIC insures banks, SPIC insurance brokerages, details can be found SIPC introduction.
      • SIPC protects securities and cash up to $500,000, including up to $250,000 in cash to buy securities

 Takeaway

  • If you plan correctly, you can avoid a massive financial blow if something like Lehman Brothers happens again.  For reference, in 2008, the FDIC had to raise limits from $100,000 to $250,000 as there were legitimate concerns for runs on the banks
  • Hopefully you don't need to rely on these last resort protections, but be mindful of them
  • Another bonus tip for married people.  Having money in separate names is a good idea in-case someone ever sues you (e.g. doctors get sued all the time even though they may not have done anything wrong) 

 

The information above is for your education and entertainment.  This is not financial advice, please consult your own financial advisor for your specific situation.  The above is information collected from a variety of sources with links provided from the internet.

 

 

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