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FDIC insurance for new 1 Year CDs

Posted by Cheryl Costa February 11, 2009 10:33 AM

One year certificate of deposits (CDs) are very popular investments, but if you are considering the purchase of a very large (greater than $100,000) one year CD, you need to be aware that the new $250,000 FDIC insurance limit on non-IRA accounts is due to expire on 12/31/09. So, if you open a one year CD now, that CD will not mature until February 2010 -- two months after the higher limits are set to expire.

It is possible that the new higher limits will be extended, but no one knows for sure. If you are thinking of investing more than $100,000 in a one year CD, you might want to consider opening accounts under different categories of legal ownership or opening accounts at multiple banks so you can stay under the "old" FDIC limits. For more information on FDIC coverage levels, visit the the FDIC website.

If you don't have the time to be running from bank to bank, you should know about the Certificate of Deposit Account Registry Service (CDRS, pronounced cedars). CDRS allows bank customers to place money in multiple CDs across many banks by visiting one bank. When you invest through CDRS, you get the convenience of one statement from one bank. On the downside, the rates paid on the CDs could be slightly lower so you will have to do your homework and scout out the best rates you can find.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.
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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.
Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.
Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.
Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.

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