Know the Rules to Keep Your Cash Safe

Thursday, October 9, 2008; Page D02

Everywhere I go, I can feel the tension. People are naturally concerned about their investment portfolios, but increasingly they're also worried about the safety of their cash.

An elderly couple wrote to me and asked the following:

"Can you help us understand the limits on insurance for CDs, money-market accounts, and checking accounts in banks, savings and loans, and credit unions?"

With a number of major bank failures and takeovers, many people are wondering how much of their cash is protected.

On Friday, President Bush signed the Emergency Economic Stabilization Act of 2008. That law raised the amount of money in bank accounts that the Federal Deposit Insurance Corp. covers from $100,000 to $250,000 per depositor.

However, here's why you have to pay attention to all the fine details of the plans to "protect" our cash. The increase in the FDIC coverage is only temporary.

The basic FDIC deposit insurance limit will return to $100,000 after Dec. 31, 2009. The legislation did not increase coverage for retirement accounts, which continues to be $250,000.

If you have questions about FDIC coverage, go to On the site you will find EDIE, a calculator that will tell you how much of your cash is covered by the FDIC.

The new law also temporarily increased the insurance limit to $250,000 on accounts in federal credit unions and the majority of state-chartered credit unions.

Federal credit unions are regulated by the National Credit Union Administration, an independent federal agency. It operates and manages the National Credit Union Share Insurance Fund, which insures the deposits of nearly 89 million accounts in all federal credit unions and the overwhelming majority of state-chartered credit unions.

In nine states, 163 state-chartered credit unions offer coverage from American Share Insurance, a private insurance company. It insures up to $250,000 per account. If you have an account at a credit union with this insurance, it is not guaranteed by the federal government. However, Dennis R. Adams, president and chief executive of ASI, says depositors with its coverage should not be worried about their accounts. "We have a good track record and good financial statements," Adams said. "Credit unions are not the source of the problems today."

Before the FDIC limits were raised, the Treasury Department announced that it would provide protection for cash stashed in money-market mutual funds, which are offered by mutual fund companies. These funds are not the same as money-market accounts offered by banks, which are FDIC insured.

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