Is it safe to keep large amnt of money in federal bank account?

Answer 1

The United States Government created an insurance scheme, following the rash of collapsed banks during the depression. This was to instil confidence in depositors that their funds would be safe, even in the event of a bank's collapse.

Cheque accounts, savings, and 'CD's (Certificates of Deposit) are insured by the FDIC. (Federal Deposit Insurance Corp). Banks also may offer a money market deposit account, which earns interest at a rate set by the bank and usually limits the customer to a certain number of transactions within a stated time period. All of these types of accounts generally are insured by the FDIC up to the legal limit of USD $250,000 and sometimes even more for special types of accounts.

In almost every circumstance, the insured ceiling of USD$250,000 is per bank and not per account. Therefore, should someone have more than the maximum ceiling of USD$250,000, distributed over multiple accounts, such as cheque and savings, then the maximum insured amount would almost always be limited to USD$250,000.

Many American banks are now offering customers a number of investment schemes which are not considered traditional 'deposits,' as defined by the FDIC. These may include mutual funds, annuities, life insurance policies, stocks and bonds. Unlike the traditional cheque account, current account, or savings account, products are not insured by the FDIC.

It is always best to confirm with your bank that your account is clearly protected under the terms and conditions of FDIC guidelines.