Nobody really wants to consider how many banks failed in 2009, and how many of those banks that failed were holding accounts such as the “safest” investments vehicle, certificates of deposit. With almost 30 banks already having failed in 2010, and the Federal Deposit Insurance Corporation (FDIC) expecting more bank failures to come, this is really only the middle of the Great Recession’s wave of banks failing. In fact, the FDIC expects bank failures to peak in 2010 before the bank failures eventually start to slow down and come to almost a complete stop. Even though the Federal Deposit Insurance Corporation fund is operating in the negative, the FDIC says everything is fine because they have more than $66 billion in reserve to cover future bank failings.
How to Ensure Your Certificates of Deposit Are Safe
You can take back control to ensure that your certificates of deposit (CDs) are safe. First, you need to be aware of how much your individual financial institution insures your CDs for, in addition to the FDIC insurance that covers the certificates of deposit for up $250,000 for each certificates of deposit account holder. In case you are not aware, the FDIC raised the FDIC insurance coverage from $100,000 to $250,000 to help with the tumultuous economy, but in 2013 the coverage amount is supposed to return to its normal $100,000 level.
Certificate of Deposit Account Registry Service Leverages Safety
Certificate of deposit holders can add further assurance that their CDs are safe in their current bank by using the Certificate of Deposit Account Registry Service (CDRS). Since this service allows CD holders to extend their coverage to up to $250,000 per institution, the service spreads out your CD deposits for you. To you, it’s a seamless process because you still deal with one banking institution, receive one statement and manage one account. The program handles the rest for you.
How You Find Out Your Bank is Closed
If your bank is in trouble, you may not be notified until the bank is physically closed by the FDIC, which occurs when the chartering authority revokes the bank’s charter and turns control over to the FDIC. The FDIC typically makes a formal announcement at this point, which may include the reason why the bank failed. If you’re not paying attention to these announcements, you may not find out until you go to the bank and see the notices that are posted on the door. Keep in mind too, that even if your bank does fail, it is important not to panic because you will still have access to your funds.
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