Just remember — the higher the rate they are willing to pay the higher the risk you are taking. There are exceptions, because of the issues of perceived risk versus actual risk. The same caveat holds true for low rates — just because it is a very low rate doesn’t mean that it is safe. Banks do fail and FDIC insurance works fairly well, but you need to be well-documented and you need to be prepared to re-invest in what will be lower rates of return.
The following article I found to be particularly helpful in assessing the risks and following the somewhat roundabout procedures of applying to the FDIC for your money up to the allowed maximum. I did find that the time for refunds to reach you is much shorter than I had thought.
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Do business only with an institution that provides FDIC insurance on deposits. Not all do. Make certain your bank is FDIC-insured by searching the “bank find” tool at fdic.gov.
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Stay within FDIC insurance limits, generally $100,000 per person per institution, but higher under some circumstances. A family of four, for example, can cover as much as $1.5 million by titling accounts so they fall into separate account categories. For more information on specific categories, go to this FDIC page.
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If you invest in a deposit through a broker, be sure he or she is reputable, keeps good records and is responsive. FDIC deposit payouts have been delayed when brokers failed to quickly provide the FDIC with necessary records. Sometimes your funds could pass through more than one broker, a factor the FDIC needs to know. Also, you may find yourself exceeding FDIC insurance limits if you have other funds at the same failed bank to which your broker transmitted funds.
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Your investment at a bank must be a deposit, such as a CD, checking account or savings account. Securities, such as stocks, bonds, mutual funds and annuities, are not FDIC-insured.
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Don’t neglect your FDIC-insured accounts or you could lose your rights to them. If your bank fails, you have 11-1/2 years to claim your deposit account, or it becomes the property of the FDIC. If there’s no activity for 18 months from the date of your bank’s failure, the FDIC turns the funds over to the state’s unclaimed property division. Federal rules require that after 10 years, states must return unclaimed deposits to the FDIC.

Filed under: CDO, community banks, credit unions, currency, inflation, interest rates, Investor | Tagged: bank failure, CD rates, FDIC, Savings rates |
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