FDIC insured up to 100k. But what if...

[Zewt]

... you have 10 million dollars and want to keep it liquid? I doubt some one would be willing to make 100 different bank accounts just for the sake of making sure his money is safe. Or is that not uncommon among the rich and powerful?

Is there a such thing as bank accounts specifically for those who like having a lot of cash? Perhaps you could buy insurance for you money, as odd as that sounds?

And no, I don't have 10 million. I just had a scary dream where I lost most my money because my bank only insured me up to 100k.

[iaacp]

Some people do indeed split money into different banks to avoid possibly losing it.

[tom10167]

Yes it's all handled properly and I've even seen on banks a little statement underneath that saying something to the effect of "If you have more it will get split up automatically."

EDIT:

I think the FDIC statement is saying that by law all accounts MUST be insured up to 100k, as in a minimum.

[Seven]

FDIC insurance gives you a $100,000 maximum coverage. This basically means the government has your back for a certain bank account at a bank up to $100,000, and from there you're on your own.

People do split their money up, but obviously this has it's issues (not getting as much interest as you normally would). Most people don't have that much cash laying around however. People pour their money into real estate, stocks (obviously not a foolproof thing to buy), bonds, etc. Anything that can be converted relatively quickly into cash (called liquidity) is a good idea if you're trying to avoid having assets you can't get rid of when you need money.

7

[Elif Tymes]

I have 2 bank accounts and I don't have nearly $100K ;). Splitting accounts isn't uncommon. I'll probably have another 2 or 3 in the next few years.

[Frodo Baggins]

People do split their money up, but obviously this has it's issues (not getting as much interest as you normally would).

Really? Why's that?

[Diddyu]

Really? Why's that?

It could be that one bank has a higher intrest rate than another one, so instead of having 200k at 3% interest, you have 100k at 3%, and 100k at 2.5% (at a different bank).
I believe that if you have large amounts of money though (millions/billions) some banks will offer you a higher interest rate to keep you as a customer.

[Roofles]

It could be that one bank has a higher intrest rate than another one, so instead of having 200k at 3% interest, you have 100k at 3%, and 100k at 2.5% (at a different bank).
I believe that if you have large amounts of money though (millions/billions) some banks will offer you a higher interest rate to keep you as a customer.

Frodo is making sure you know math more than anything. 5% of 1 million is still 50,000. 5% of 100,000 is 5,000, but if you have 10 accounts, you still end up with 50,000 in interest.

[Frodo Baggins]

Frodo is making sure you know math more than anything. 5% of 1 million is still 50,000. 5% of 100,000 is 5,000, but if you have 10 accounts, you still end up with 50,000 in interest.

Ya caught me :)

I knew the correct answer (the one Diddyu gave). And also the incorrect one (the one Roofles gave).

[Captain Newbie]

FDIC is gearing up for a lot of domestic bank failures this year, incidentally.

Federally-chartered United States credits unions are similarly insured by the National Credit Union Administration--NCUA, with each depositor guaranteed to at least $100,000.

By the way, big investment houses carry no insurance for most people's accounts, despite billing themselves as banks.

[JerkasaurusRex]

Swiss banks is where rich people keep their money.

[Jab-tech]

Swiss banks is where rich people keep their money.

Swiss Banks is where people hide money,.

[How Stuff Works]
Swiss law forbids bankers to disclose the existence of your account or any other information about it without your consent
[/How Stuff Works]

[IAmMoen]

Swiss Banks is where people hide money,.

[How Stuff Works]
Swiss law forbids bankers to disclose the existence of your account or any other information about it without your consent
[/How Stuff Works]

I believe they also charge an interest rate (as in your money will decrease and not increase) as their way of making money.

[Quailane]

I believe they also charge an interest rate (as in your money will decrease and not increase) as their way of making money.

You believe wrong.

[tom10167]

I heard from some people(who'd probably know) that banks in the Caymans just recently added some very aggressive costs to their accounts.

[iaacp]

I believe they also charge an interest rate (as in your money will decrease and not increase) as their way of making money.

Wrong. Swiss banks have the highest (that I know of) interest rates - the kind where you make money. My teachers brother has an account with something like 18% interest.

[Zewt]

Wtf, son? 18% interest?

[Niku-Sama]

back on topic of the FDIC thing. the way i see it, if you need to make good on the insurance its probally not going to matter either way because some rather drastic economy thing has happened and 100K might not mean jack any way.

on top of all the other people in the country that are going to make good if it was a national economic problem the ammount of cash the FDIC would be handing out would plummit the value of a dollar even more

[Turd Furguson]

Wrong. Swiss banks have the highest (that I know of) interest rates - the kind where you make money. My teachers brother has an account with something like 18% interest.

Does he disclose this account to the IRS?

[Jab-tech]

back on topic of the FDIC thing. the way i see it, if you need to make good on the insurance its probally not going to matter either way because some rather drastic economy thing has happened and 100K might not mean jack any way.

on top of all the other people in the country that are going to make good if it was a national economic problem the ammount of cash the FDIC would be handing out would plummit the value of a dollar even more

There are quite a few smaller banks around that wouldn't need a drastic (worldwide) economic disaster to cause them to fold.. Figure something along the lines of Nick Leeson / Barings bank , although unlikely to happen here it very well could.

[Captain Newbie]

back on topic of the FDIC thing. the way i see it, if you need to make good on the insurance its probally not going to matter either way because some rather drastic economy thing has happened and 100K might not mean jack any way.

on top of all the other people in the country that are going to make good if it was a national economic problem the ammount of cash the FDIC would be handing out would plummit the value of a dollar even more

Maybe yes. Maybe no. The dollar has already plummeted so much thanks to The Fed's inflationary practices, and the FDIC doesn't actually print money—instead, most of the FDIC's insurance comes from premiums assessed to depository institutions, rather than simply creating it out of thin air like the Federal Reserve.

Although if FDIC was faced with tens/hundreds of banks becoming insolvent simultaneously they'd probably have to be themselves bailed out.

[Jab-tech]

Although this doesn't answer the original question, I did ask my wife who was an accountant for a high net worth individual in NY (been on Forbes 400 for 10+ years).

She said most of his money was invested in stocks/bonds etc the usual stuff. His family were looked after by CRTs (Charitable Remainder Trusts). This doesn't exactly keep your money liquid but you and/or whoever the trusts are opened for are guaranteed big tax savings and any dividends. Thats why many billionaires start there own charity, gift large chunks of stock (reep the tax savings of giving to a charity and not have to recognise appreciation of stock/real estate etc) and still have control over the money while still getting the dividends.