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Great News: $250,000 Bank Insurance Now Permanent

President Barack Obama signed the new Financial Reform bill Wednesday, and one immediate change will be the current $250,000 limit on FDIC Insurance for bank deposits and NCUA Insurance for Credit Union (CU) deposits becomes permanent. That’s great news.

Without this new law the $250,000 per-bank or credit union limit would have expired at the end of 2013 and we would have reverted to the old standard $100,000 per bank or CU limit on deposit insurance coverage. (Read an earlier Suze Scoop for how you can have even more than $250,000 covered by FDIC or NCUA insurance.)

That means you no longer have to be careful about putting more than $100,000 in a long-term CD that would mature after 2013. Now you can keep up to $250,000 on deposit for any amount of time.

That said, I wouldn’t necessarily rush to tie up big amounts of money in a long-term CD right now. With rates so low, that’s a long time to lock in a low rate. Better to keep your deposits shorter-term so you always have some money coming due that you can reinvest at higher rates. It may not happen this month, or during this year, but rates will indeed rise.

Help for Those Who Lost Money in Bank or Credit Union Failures
The new law also extends some welcome help to thousands of bank and/or Credit Union depositors who lost money when their banks and or credit unions failed and their deposits exceeded the FDIC or NCUA limit in place at the time. If your bank or credit union failed on or after January 1, 2008 and you lost some of your money that was above the insurance limit, you will soon be getting a check paying you back for all your lost principal up to the $250,000 limit.

The FDIC told me today that the checks will be sent automatically (by regular mail) within two days of the law being signed by the President.

Affected depositors at the following banks will receive a check:

  • Hume Bank, Hume, MO;
  • ANB Financial, N.A., Bentonville, AR;
  • IndyMac Bank, F.S.B., Pasadena, CA;
  • First Priority Bank, Bradenton, FL;
  • The Columbian Bank and Trust Company, Topeka, KS;
  • Silver State Bank, Henderson, NV.

Once the law is signed, the FDIC will post more information on its website. Or you can call 1-877-ASK-FDIC.

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