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FDIC Insurance - In order to secure the viability of the US banking system, the Federal Deposit Insurance Corporation (FDIC), an independent agency of the fedral government, provides insurance in each qualified bank account for each qualified institutions. Insurance is generally provided to a maximum amount of $100,000 for an individual account or per depositor if the depositor has multiple accounts (i.e., a joint account with two holders is insured to $200,000, provided neither has other accounts with the financial institution). On October 10, 2008, the FDIC enacted special rules to remain in place at least through 2009. Under the special rules, insurance for each depositor will be provided to a maximum amount of $250,000 in an individual accounts; however, where a depositor has multiple accounts at the same financial institution, their maximum insurance is only $200,000 per depositor (i.e., a joint account with two holders is insured to $400,000, provided neither has other accounts with the financial institution). or While all deposits (CDs, Checking, Savings) held in the same type of ownership are added together and insured to up to the maximum amount, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. Please visit the FDIC's website to determine if your financial institution is insured and use its "ask Edie" program to determine your coverage limits. We recommend that you deposit savings in only FDIC insured institutions and that you do not exceed FDIC coverage limits. Additionally, some major financial institutions claim that deposits over the single account FDIC insurance limits are insured because the financial institution divides your deposits between several separately chartered financial institutions; however, most of these claims have not been tested in the event of a bank failure.
Any certificate of deposit will bear substantial penalties for early withdrawal, if it is even allowed. Ordinarily, the penalty for early withdrawal wil be a loss of all of your accrued interest, but certain banks may also assess penalties that will result in a loss of some of your principal. If you are willing to tie up your money for one year or more, you may be able to get a rate that outperforms the best yielding online savings accounts online savings rates by about 35 basis points. If short term interest rise during that time, savings accounts, money market funds and auction rate securities (all of which allow greater liquidity) may prove to earn better returns.