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Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts Expires On December 31, 2012

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Scott A. Chernich & Patricia J. Scott
Foster Swift Banking, Finance & Real Estate E-News
December 3, 2012

Beginning January 1, 2013, the temporary unlimited coverage for noninterest-bearing transaction accounts will no longer be insured separately from other accounts at the same FDIC-insured depository institution.  The Dodd-Frank Deposit Insurance Provision affords noninterest-bearing transaction accounts unlimited deposit insurance coverage.  Absent an extension or further legislation, that provision is scheduled to expire on December 31, 2012.

As a result, noninterest-bearing accounts will be added to any of the depositor's other accounts in the applicable ownership category, and the aggregate balance will be insured by the FDIC up to the Standard Maximum Deposit Insurance Amount of $250,000, per depositor, at each FDIC-insured depository institution.

The FDIC issued a financial institution letter FIL-45-2012 to provide direction and guidance to financial institutions.  The letter advises financial institutions to notify noninterest-bearing transaction account holders of the changes in FDIC insurance coverage so account holders may consider the impact of the change and determine proper management of those accounts.