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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.

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