Let’s say you win $1,000,000. You’re interested in saving it and living off of it. Can one just put it in a Savings account, accepting the fact that FDIC insurance only covers $100,000 of it? And how does that work?
For example, if I deposit the entire amount at Branch A of Bank A, and Branch B of Bank A is robbed, my money’s all okay, right? Or has the money been ‘distributed’ throughout Bank A’s branches? Does it do any good to separate the money into $100,000 increments and deposit it at ten different branches of Bank A?
The FDIC benefit (loosely) applies to the types of account you have. Which branch is irrelevant.
By “type” of account I mean Individual, joint, gift to minors, etc.
If you have a spouse that you trust, you can easily get $300,000 coverage in one bank by having an individual account in YOUR name, and individual account in your SPOUSE’s name, and a joint account.
Do this in 3-4 different banks and you’re good to go…just make sure they have the FDIC sticker in their lobby window or else all bets are off.
There are other ways (trusts, etc) that you can get even more coverage under one bank, but I have forgotten that stuff. Good thing there’s a buncha posters in here…somewhere…that will provide the internet link to the FDIC site with all the answers…
Sorry…about the robbery thing: Don’t sweat it, it’s not your problem. “Your” money is not in the bank until you make a withdrawal. At that time you take some of “their” money and they just deduct that much from your balance. If the bank gets robbed, it doesn’t affect your balance.
Oh…and don’t put your $1million in the bank. Put it in a municipal bond mutual fund and live off the interest. The interest on that type of fund appears to be lower than a regular bond fund, but the interest is not taxable (federal). Your net income is, therefore, usually better.
Or you can just give it to a charity…for Spaniards who’ve had their fathers slaughtered by six-fingered men.
FDIC does not apply to things like bank robberies, where normal business insurance would come into play. FDIC was set up to cover depositors in case the bank goes completely belly-up, in which case it wouldn’t matter which branch of the bank your money was in.
