Here’s the story: The Federal Deposit Insurance Corporation (FDIC), a government agency, insures accounts in its member banks, which include most banks in the United States. (There’s separate, comparable insurance for credit unions.) A $250,000 insurance limit applies per depositor per bank. For example, if you had $250,000 in a certificate of deposit (CD) in one bank and another $250,000 in a CD in another bank, both accounts would be covered. But if you had $300,000 in one CD, only $250,000 would be insured.
You can actually qualify for more than the $250,000 coverage at a single bank if your assets are in different types of accounts. For example, an individual retirement account (IRA) is insured separately from a taxable account. So is a trust account. And you qualify for up to half the coverage on an account you own jointly with someone else.
What’s not insured is any money you invest through a bank that’s not in a checking or savings account. For example, money in a mutual fund the bank sells is not insured, even if the name of the fund includes the name of the bank. But money in the bank’s money market account is insured. The bank is required to tell you which accounts are insured and which are not. Be sure you know which are which.
Electronic bill payment is one of the most popular features of online banking. You can have your bank pay certain bills automatically each month just by providing the payment information the bank needs and identifying the account to debit. Some banks pay these bills as they’re due, rather than when they arrive. Others let you set the day on which a specific bill, such as your car lease, will be paid.
If you prefer to authorize bill payments yourself, you can do that too. You access your account once or twice a month, key in the amounts you want to pay to a list of established payees or one you’re adding, and indicate when you want each payment made. The bank handles the rest. The payments may be made electronically to some payees and by check to others, depending on arrangements the bank makes. Some banks handle electronic bill payment for free, while others charge a small fee, usually less than $10 a month.
Contributions from the book It’s Your Financial Life in this press release are used with permission from Light Bulb Press.