Accounts w/ 2 or more banks essential?

[Scanner]

FDIC to Add Staff as Bank Failures Loom - WSJ.com

Here is the original article BTW

[Scanner]

BTW, I wouldn't think it matters if it's business checking or personal checking. . .I think both would be insured under FDIC.

[Ima saver]

I agree, all accounts are insured up to $100,000 per name on the account. I have my money in several banks in this area. I move to whichever gives me the best rate at the time.

[scfr]

BTW, I wouldn't think it matters if it's business checking or personal checking. . .I think both would be insured under FDIC.

Scanner - I am now thinking you are probably right on this. Sorry if I mispoke and caused any concern (Aleta). If my memory is correct, my husband's business account is not FDIC insured, but that may be because of the type of account he chose?.....Something I definitely need to check with him about.

[sweeps]

I agree, all accounts are insured up to $100,000 per name on the account. I have my money in several banks in this area. I move to whichever gives me the best rate at the time.

Exceeding the FDIC limits is off-topic for this thread. If you have $1,000,000 in checking and savings, then you definitely should be spreading that around different banks.

This assumption in this thread is that you are within FDIC limits.

[Scanner]

Now. . .from what I know. . .if you have let's say Business Checking (sole proprietor) with 20K in there and Personal Savings of 100K. . .you are only insured 100K. .

It's kind of "depositor" insurance. . .I am not sure if you are a Corp. how that would work since a Corp. is kind of a recognized person under law.

[scfr]

Update on business accounts: My husband's account is a Sweep Account. When the amount in his checking account exceeds a certain amount, funds are "swept out" in to a sub-account (in his case it is a MMF), and when funds are needed in checking, they are "swept back in." The sub-account is what is NOT FDIC-insured. (The checking account is.) So, business accounts may or may not be FDIC insured, depending on what type of account you have. I don't know how common sweep accounts are in general; among our circle of business peers, they are very common.

Since his bank is only in so-so shape, we are now considering switching his business account to a type that is 100% FDIC insured.

Once again, sorry I misspoke about business accounts. Hope I didn't cause any unnecessary concern. Thanks, Scanner, for the catch.

[pfodyssey]

A few quick thoughts on this:

1) In many cases, the FDIC reaches an agreement with another local bank to transfer the accounts to their institution. Therefore, any delays are likely to be very short (days?). The challenge is then to figure out if you want to stay (terms / conditions of your account may change after some period)

2) Credit cards - yes, this was mentioned and is an obvious solution to a short term cash crunch.

3) For big chunks of money, I think it's great to consider multiple banks. If your bank is strongly rated, then it probably doesn't matter much though.

Generally, unless I had large sums, I would not purposefully look to have accounts in multiple banks in the VERY UNLIKELY event of a closing. Of course, you may want to figure out if your current bank is on shaky ground (you can get ratings at bankratemonitor.com) and consider whether you should be there at all.

[PrincessPerky]

Can't you pay rent on a CC?

[disneysteve]

Can't you pay rent on a CC?

I wish I could pay my mortgage with my CC. That would be great.

[Aleta]

By the way Scfr, thank you. It is sometimes good to bring up these issues because most of us don't realize how these rules can affect us. Personally, I'm going to check tomorrow anyway.

To the above person, the idea in having your money in different banks would be like an insurance of being able to tap other accounts in case one of your banks had a problem.

[scfr]

Can't you pay rent on a CC?

Unfortunately, no. It would be nice if we could, to get the cash-back bonus! We can pay by check, or by cash but then only by prior arrangement.

I would think that there would be other examples where you might need to get hands on your funds in short period of time, but rent was the only one that came to mind immediately.

I guess if you're one of those folks who doesn't have a credit card, it might be especially important to keep funds with more than one bank.