With the state of the banking industry these days, you can never be too sure if a bank you’re thinking about putting your hard earned money in is actually insured. The best way to do this is to use the FDIC’s Bank Find tool to confirm the bank is who they say they are (or the NCUA tool for credit unions). You will want to check the website URL to see that it matches what’s listed on the FDIC site as well.

If it seems too good to be true, double check. (heck, if it seems perfectly fine, double check anyway)

FDIC Insurance has been on a lot of people’s minds given the recent conservatorship of IndyMac. Many people that had more than the FDIC insurance limit, which is essentially $100,000 per person per institution, lost their money but if you structure your accounts correctly, one person could easily have many times more coverage. At worst, you could open multiple accounts at different institutions and get coverage that way, there’s almost no reason to have more than the $100,000 limit.

Today’s Seniors has a great explanation and example scenarios of how you can extend the insurance. If you are married with children, there are several ways you can extend your insurance limits. First, each person in the marriage can open an individual account that gives them $100,000 of cover. Then, they can open a joint account that has $200,000 of total coverage. If you’re keeping score, that’s three accounts with $400,000 of coverage ($100k, $100k, $200k). Then, each can open a testamentary (revocable trust) account naming each other as beneficiaries for another $100k each - total of $600k. That’s over half a million dollars in coverage.

Always consult a financial professional before making any decisions, I’m not a financial professional.

The FDIC insurance limit on bank accounts is $100,000 per account per type. It’s a little confusing sometimes but you’re safe knowing that $100,000 is the maximum you should ever keep in any bank account. In the event the bank should fail, which means that it’s gone into FDIC conservatorship, your deposits are insured up to $100,000. Your first $100,000 in that account is safe from loss.

In the latest bank collapse, IndyMac Bank, people withdrew $1.3bn in 11 days and caused a liquidity crisis that forced the Office of Thrift Supervision to step in and take over. If you had more than $100,000 in an account there, you would normally expect to get absolutely nothing back but as this plays out you might get something back.

The bank went from OK to done in eleven days. There were signs of this happening, of course, as 1.3 billion was withdrawn, but it shows that if you weren’t paying attention and had over $100k in there; you were out of luck.

I’m all for simplification of accounts and assets, the less you have the less you can screw up, but with so many online banks offering great savings rate APYs you should be able to find places to store your money if you have more than the FDIC limit.

Bank Deals has posted the fourth bank failure of 2008, a little bank in Minnesota, along with a comprehensive guide about what to expect if your bank goes belly up.

Rule #1: Don’t have more than $100,000 in an account at any one bank.
Rule #2: (if you must break Rule #1) Understand the FDIC protections you are afforded.

A lot of people expect a lot of banks to go under because of CDO’s so keep a watchful eye out.