Best Interest Rate Banks

If your bank participates in this program, and many of the major banks do, then all of your money in non-interest bearing deposit transaction accounts is FDIC insured… with no limit!

When the FDIC announced the new deposit insurance limits last year, they included a provision called the Transaction Account Guarantee Program that insured the entirety of your balance in a non-interest bearing deposit transaction account. That’s right, through this program, you have unlimited protection in non-interest bearing deposit transaction accounts. I didn’t know about this program until I saw a notice in my local bank! The program was a trial that lasted for a month, from October 14th - November 14th 2008 and then banks had to elect coverage (they pay for the additional insurance through fees).

Non-interest bearing deposit transaction accounts are typically checking accounts and they do not earn any interest. Your standard checking account will usually apply but you should call up your bank to confirm (they may not have joined the program). The FDIC also included two other types of accounts under this protection. The first is what’s known as an Interest on Lawyers Trust Accounts (IOLTAs), which is an interest-bearing checking account for funds held in trust or escrow on behalf of a third party. The second account is they covered was an interest bearing checking account with a rate of at most 0.50%.

The coverage is separate from the FDIC coverage. This means that if you have a checking and a savings account at a bank participating in this program, your checking has unlimited coverage and your savings (and everything else) is covered up to $250,000 as normal.

This program is set to expire along with the increased coverage limits (December 31 2010) so we won’t know what will happen afterwards.