Changes to FDIC Coverage

Effective:  January 1, 2013

The Federal Deposit Insurance Corporation (FDIC) coverage amounts will change January 1, 2013.  Currently, all zero interest demand deposit accounts have unlimited insurance coverage.  In addition, all other accounts within the same bank are covered up to $250,000.  The unlimited coverage on zero interest demand accounts will expire on December 31, 2012.

Effective January 1, 2013, all zero interest demand accounts will be insured up to $250,000.  In addition, all other accounts will still be insured up to another $250,000 assuming the City and the bank are in the same state.  The second $250,000 does not apply to City’s where the bank is across state lines.  Beginning in January, the maximum level of FDIC coverage a City may have is $500,000.

The City is responsible to ensure that deposits that are not covered by FDIC insurance have pledged collateral or bonds to cover them in the event of a bank closing.  If pledged collateral is used, the deposits must be covered at 110%.  Some banks monitor FDIC limits for City’s, but often they are checking after the fact.  It is the City’s responsibility to ensure compliance by January 1, 2013.

Have questions?  Call or contact us today!