FDIC insurance coverage protecting against bank failures is per bank and per account ‘ownership type’. While having multiple checking, savings, CDs, or other typical bank accounts does NOT help multiply your coverage, there are some tricks to easily get more.
Married couples easily get $1,000,000 FDIC coverage
Since Individual and Joint accounts are counted separately, and each owner in a Joint account gets $250 K apiece for $500K total, a married couple– or any two people, but ya know, ya gotta trust the other person– can simply each open an individual account at the same bank, put $250 K apiece in their solo accounts, and voila, $1 M in total coverage! The bank I use and recommend makes this a breeze.
So, again, follow these steps:
(1) Keep $500 K in your Joint account(s)
(2) Each of you open INDIVIDUAL accounts at the same bank with up to $250 K across your individual accounts.
Other tricks to boost coverage beyond $250,000
You can further increase this amount with beneficiary accounts or custodial accounts for minors like UTMAs, but make sure you’re doing it right, and use the FDIC’s insurance calculator to test your strategy. Individuals can use the POD (beneficiary) hack to boost their coverage beyond $250,000, or created a joint account with a trusted person like a financially-secure parent who can contribute their half of the dough.
Individuals who own a small business like an LLC or a Corporation can get another $250 K via a business account.
POD beneficiaries can boost your limit too
It seems that if you make your account ‘Payable On Death’, i.e.: add one or more beneficiaries, each beneficiary listed counts as $250 K insurance. So in theory, you could have one individual account with no POD at $250 K insured, then another at $500 K insured if you list two 50-50 beneficiaries, such as your children, on it. Check to make sure this is true first, as it wasn’t 100% clear to me reading the FDIC’s rules.
Here’s what Ally had to say on this:
The FDIC’s calculator seems to make it clear that yes, adding PODs is another quick & easy way to boost coverage. In theory, married couples without children could get ANOTHER $500 K of coverage by creating two solo accounts for each of them again, and naming each other as the POD beneficiary on each. (Or, another $1 M of coverage if, say, they each opened individual accounts, named their two kids, for $500 K coverage per account.)
Further reading: The FDIC has a brochure with gratuitous detail in case you’re as big a financial nerd as I am.
