You’re ready to open a certificate of deposit (CD) now that you’ve found the rate and term that align with your savings goals. But there’s one more thing to consider, ownership.
Most banks and credit unions offer FDIC and NCUA insurance on deposit accounts up to $250,000 per depositor based on the ownership of the account – in this instance, a certificate of deposit. Bank account ownership identifies who owns an account, who can transact on the account, and what happens upon death of the account owner. The FDIC and NCUA use ownership, not account type, to determine insurance limits.
Insurance Calculator Estimators
The FDIC’s Electronic Deposit Insurance Estimator (EDIE) and NCUA’s Share Insurance Estimator are calculators that illustrate how insurance rules and limits apply to your specific deposit accounts at each bank or credit union. Based on the account ownerships you enter into the calculator; the calculator will provide what is insured and what portion (if any) exceeds your insurance limit at that specific financial institution.
What accounts are insured?
The calculators estimate insurance coverage on deposit accounts offered by an FDIC or NCUA-insured bank or credit union holding an account in one of the following ownership categories:
- Single accounts – no beneficiaries
- Joint accounts – no beneficiaries
- Payable on Death/In Trust For accounts – with beneficiaries
- Revocable and Irrevocable trust accounts (Formal Trusts)
- Individual Retirement Accounts (IRAs)
- Business accounts
- Government accounts
By opening accounts under different ownerships, you can gain insurance coverage for amounts greater than $250,000.
For example, if you open a CD with joint ownership, and a CD with you as the owner with a named death beneficiary, your insurance coverage would be up to $750,000, based on the two different ownership categories of joint and payable upon death.
What You Need to Calculate Coverage
You will need the following information to calculate the coverage for your CD:
- Bank name
- Owners and beneficiaries of the deposit accounts
- Ownership category per the above list
- Account balance
You can print or download the insurance calculations for your files. Most financial institutions will help you with the insurance calculators if you have questions.
Once you choose one or more ownership categories and have confirmed your insurance coverage, you’re on your way to opening your CD account.
Disclaimer: This is not intended as legal advice. Please consult your financial planner to understand how these topics may affect your individual financial situation.
