Menu
Personal finance
GE Capital Purchasing MetLife Bank

Washington DC Might Divest from Bank of America, Wells Fargo

Miles By Discover Offers Relief to Noncommittal Travelers

Collection Agencies Resurrecting Old Debts Through Credit Card Offers

Treasury Doubles Purchase Limits on Electronic Savings Bonds

Cordray’s First Move as CFPB Head: Regulate Nonbanks

Weekly Wrap: Bank of America’s Worst Week Ever?

Dear U.S. Banks, Your Business Model Stinks

Shadow Banking Due for Some Time in the Spotlight

Weekly Wrap: Banking Slowly Dissolves?

Under the Roofs of Coffee Shops You’ll Find Your Online Bank

Brokerage Checking Still a Competitive Choice

Beware the Mirthful FOMC Meeting

Did ING Direct Customers Overreact to the Capital One Purchase?

No Balance Transfer Fee Offers Reappear But Hard to Exploit

Russell Simmons’ RushCard Lowers Fees, Is Still Bad

The Reason Why Freddie Mac Doesn’t Want to You to Refinance

New Bank Perks Cater to Tech-Savvy Customers

St. Louis Fed President: Raise Interest Rates

Whitney Warns: Banks to Banish Middle Class

Dime Savings Cites Regulations in Switch to State Charter

FDIC to Banks: Start Lending Again!

Weekly Wrap: Grey Days and a Sideshow

Weekly Wrap: Banking’s Spring Is Still Far, Far Away

American Express and Gen Y: BFF?

The Wealthy Prepare to Move Their Bankrolls
The upcoming expiration of a generous deposit-insurance law may have the “1 percent” and cash-heavy savers scrambling to safeguard the large amounts of funds they have stored in certain bank accounts.

At the end of the year, the FDIC will cease unlimited insurance on cash in excess of $250,000 in non-interest bearing accounts. The insurance was first introduced in 2008 as part of the FDIC’s Temporary Liquidity Guarantee Program during the financial crisis, when many Americans were pulling their money out of the stock market. The unlimited deposit insurance for these accounts was extended to Dec. 31, 2012 by the Dodd-Frank Act.

From December 2008 to December 2011, deposits in non-interest bearing accounts rose from $1.37 trillion to $2.21 trillion — a $840 billion increase. Meanwhile, deposits in interest-bearing accounts rose from $5.17 trillion to $5.62 trillion — a $450 billion increase. The data, from the FDIC, suggests that non-interest bearing accounts — usually checking accounts and cash management accounts — provided an attractive safe haven for Americans with a lot of cash.

Normally, prefer to keep idle cash in some type of interest-bearing account — savings, money market and certificate of deposit accounts — so that funds continue to grow. However, deposits in interest-bearing accounts were insured only up to $250,00 per depositor per account-ownership type per bank. At a time when banks were failing left and right, the risk may have driven cash to accounts that offered unlimited protection.

With the end of unlimited deposit insurance drawing close, depositors are starting to shift their cash out. In the first quarter of 2012, approximately $30 billion was moved out of non-interest-bearing accounts.

The transition may entail opening new accounts at different banks and transferring the funds over. Or, the deposits could go back into risky investments that have rebounded in a recovering economy.

Worrying about having too much cash in a checking account to qualify for FDIC insurance is one of those problems that most of us would like to have. And in general, the upcoming change will affect only the wealthiest of Americans. But in some rare instances, average Americans may need to prepare for the change too. In particular, anyone who expects a windfall of some kind (selling a business, inheriting money, etc.) during the next few months would be wise to ensure that their newfound money remains safely insured after Dec. 31.

Äëÿ ïå÷àòè

Weekly Wrap: Astrology is Bunk

Refinancing Your Mortgage Lines the Pockets of the Biggest Banks

Experian Unveils New Credit Score for the Underbanked

New Upromise Credit Card Gives 10% Cash Back at Major Online Retailers

The Best Experiences Your Credit Card Can Buy This Summer

Citi Offers New Way to Spend Rewards

Fed Study: CD Rates Are Less Attractive

Wells Fargo Raised Checking-Account Fee, Slashed Bill-Pay Fee

Weekly Wrap: Get Bullied, Get Rich

Taibbi: No Difference Between Banks and the Mafia

Why You Should Probably Raise Your Credit Limit, Especially When You Don’t Want the Money

Accounts Push Relationship Banking

Weekly Wrap: LIBOR Aside, You’re Still in Control


Articles
Fed Report Shows Mobile Banking Empowers the Underbanked

Top Gas Credit Cards to ‘Refill’ Your Wallet

Prepaid Cards for Payroll Purposes: Fair to Workers?

Weekly Wrap: Mobile Banking’s Onward March

Banks Close Revenue Gap from Overdraft Fee Losses

Banks Lack Social Media Efforts… Oh Really?

SpringCoin: Out to Automate Credit Counseling

Could Student Loan Forgiveness Help the Economy?

Chase United MileagePlus Club Card Takes Flight

Caviar and Champagne With Your Checking Account?

Weekly Wrap: Cash Rules Everything Around You? Not For Long

SmarterBank’s Checking Account Helps Pay Off Student Loans

Chinese Furious Over Banking Fees

Banks Should Use Prepaid Cards to Hook ‘Em While They’re Young

Prepaid Travel Debit Card Provider Eyes U.S.

Sallie Mae Credit Card Helps Pay Back Student Loans

Post-CARD Act, Banks Shift to Prepaid on Campus

Weekly Wrap: Things Are Not as They Seem

Gen Y Eyes Retirement with Rose Tinted Glasses

Low Interest Rates: A Ticking Time Bomb?

Are Discover Partner Gift Cards Worth the Rewards Points?

Kony Solutions’ Branding Problem: Bank Software Firm Has Killer’s Name

Weekly Wrap: Fancy Gadgetry, No Money

Weekly Wrap: Millenials’ Big Day at the Races

UFB Direct Adds Money Market Account With 1.15% APY