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Bank Accounts, What Types of Accounts are FDIC Insured?

When you save your heard earned money the last thing you want to do is place it in a savings account or certificate of deposit that doesn’t have FDIC insurance regardless where savings account rates or CD rates are. Any money you have in savings and checking accounts or in certificates of deposit (CDs) are known as a deposit accounts. These accounts earn an interest rate for placing your money at a bank.

Though current CD rates on cerficates of deposit, money market account rates on money market accounts and savings account rates on savings accounts are not the high right now. In fact the best CD rates on 1 year bank CDs are around 1.50%. The highest savings account rates are lower at around 1.25%.

Besides the account mentioned about you could also invest in an annuity. With annuities, the annuity contract spells out the terms of your agreement.You can even take money out of a CD before it matures, however, you will have to pay a penalty for early withdrawal.

However, the amount of income you will receive can go up or down with changes in financial markets and the income won’t be tax deferred.As an investor, you should be aware that these funds have different degrees of risk and could possibly lead to a loss of some or all of your principal.Today they offer many of the same services, but at one time, they were very different from one another.

It will tell you whether or not you can transfer your contract to another company.There are commercial banks, savings banks, savings and loan associations (S&Ls), cooperative banks, and credit unions.The first savings banks were founded in the early 1800s to give blue-collar workers, clerks, and domestic workers a secure place to save your money just in case.

But no mutual funds or annuities are insured by either your institution or the bank.When you buy an annuity, the bank or insurance company invests your money and agrees to pay you back according to the annuity’s contract terms.Like mutual funds, they are not insured by the bank.You may want to consider meeting with a qualified tax advisor or financial planner to learn more about annuities.You don’t pay taxes on the income earned by this money until you retire.It belongs to you and the other depositors.

Your bank or credit union must tell you if it serves the fund in an advisory capacity.Banks that sell mutual funds or annuities must clearly distinguish between regular bank teller windows and mutual fund or annuity sales windows.Your bank or credit union may sell you.

A bank is a business.Other institutions sell what are called proprietary funds, which are sponsored by an outside company but receive investment advice from the institution itself.Surrender charges can apply from five to ten years or more.T

hey served as places where a business could safely deposit its funds or borrow money when necessary.Originally, they concentrated on serving people whose banking needs were ignored or unmet by commercial banks.Where do banks get the money to lend?

That’s why bankers have a special obligation not to take big risks when they make loans.Some people go to banks in search of a safe place to keep their money.If savers didn’t put their money in banks, the banks would have little or no money to lend.

Savings banks, S&Ls, cooperative banks, and credit unions are classified as thrift institutions or “thrifts,” rather than banks.Other annuities allow you to receive income immediately.Some mutual funds and annuities have names that sound very much like names of financial institutions.

Private label funds, meanwhile, are sponsored and managed through an outside company but are only sold through one bank or credit union.Some annuities help you set aside money on a tax-deferred basis.Savings and loan associations and cooperative banks were established during the 1800s to help factory workers and other wage earners become homeowners.

Not all banks are exactly the same.They get it from people who open accounts.Also, surrender charges or penalties apply when funds are withdrawn before a designated period of time has passed.Financial institutions can also provide investment products like mutual funds and annuities to their customers.

Banks sell financial services such as car loans, home mortgage loans, business loans, checking accounts, credit card services, certificates of deposit, and individual retirement accounts.But unlike some businesses, banks don’t manufacture products or extract natural resources from the earth.

Others are seeking to borrow money to buy a house or a car, start a business, expand a farm, pay for college, or do other things that require borrowing money.Many commercial banks also made loans and offered accounts to individuals, but they put most of their effort into serving business (commercial) customers.

Your institution is also required to carry government insurance on your deposits up to $250,0 The insurer is usually the Federal Deposit Insurance Corporation (FDIC).

Contact your financial institution if you have specific questions about your insured deposits.Your savings are combined with the savings of others to form a big pool of money, and the bank uses that money to make loans.Banks act as go-betweens for people who save and people who want to borrow.

Some simply rent lobby space to outside companies.The annuity can be part of a long-term savings plan for retirement.S&Ls accepted savings deposits and used the money to make loans to home buyers.The money doesn’t belong to the bank’s president, board of directors, or stockholders.

Employees who accept regular deposits are not allowed to offer investment advice.Commercial banks originally concentrated on meeting the needs of businesses.They were started by publicspirited citizens who wanted to encourage efforts at saving among people who did not earn much money.Your financial institution is committed to returning all of your deposits (plus interest) whenever you ask.

October 17, 2011 Posted by admin | Uncategorized | Bank Accounts, What Types of Accounts are FDIC Insured? | Leave a Comment