Best Interest Rate Banks

On Monday, Citigroup agreed to purchase the banking operations of Wachovia for $2.1 billion. Citigroup will now have more than 4300 US branches and $600 billion in deposits - putting it with the two other large banking giants Bank of America and JPMorgan Chase (who took over Washington Mutual recently). In the deal, Citigroup will be assuming $53 billion worth of debt and absorb up to $42 billion of losses from Wachovia’s $312 billion loan portfolio with the FDIC covering any remaining losses.

Citigroup to buy Wachovia banking operations [Associated Press]

The FDIC has come out with an easy to use tool called EDIE the Estimator to help you calculate how much FDIC insurance coverage you have.

Through EDIE the Estimator, you “can calculate your FDIC insurance coverage for each FDIC-insured bank where you have deposit accounts. EDIE lets you know in a printable report for each bank whether your deposits are within or exceed coverage limits.”

Before you start, have a list of all your accounts at FDIC-insured banks, current balances, names of all owners and beneficiaries.

Are you worried about your assets at one of these online banks? If so, let me put you at ease, all of the banks listed on the homepage of this site (and likely anywhere on this site) is covered by FDIC insurance according to the FDIC’s Bank Find tool.

What’s this FDIC insurance? In a nutshell, banks pay for deposit insurance to protect your assets (since they lend out a large percentage of the money you deposit) and that insurance is called FDIC insurance, after the “corporation” that offers it. FDIC stands for Federal Deposit Insurance Corporation.

Your assets at a single financial institution are protected to $100,000 by this insurance. For the most part, you get $100,000 at every institution so if you have an account at FNBO Direct and one at HSBC Direct, you get $100,000 of coverage at each bank.

There are other ways to get additional protection but for most the $100,000 amount per bank is sufficient.

All online banks are able to be FDIC insured but that doesn’t mean that all banks are FDIC insured. High yield savings accounts at online banks aren’t any different than savings accounts at traditional brick and mortar banks, they are subject to the same rules and regulations of banks and thus are able to be FDIC insured.

Does that mean they’re all insured because they’re a bank? No. Just as you would any regular bank, you should always check that the bank is FDIC insured by using the FDIC’s Bank Find tool. A bank isn’t insured unless it’s listed in the FDIC Bank Find tool and has a certificate number.

For example, if you were looking for HSBC Direct, you wouldn’t find it under “HSBC Direct.” To find the official name, visit the website and look for it, usually at the bottom. On HSBC Direct’s homepage you will see this:

Issued by HSBC Bank USA, N.A. ©2008 HSBC Bank USA, N.A. All Rights Reserved.

That means you’ll want to find HSBC Bank USA in FDIC Bank Find, I just put in HSBC and found several hits, only one of which was “HSBC BANK USA, NATIONAL ASSOCIATION.” It’s located in Delaware and the FDIC Insurance certificate was #57890. You can click on the name for more information including office locations, main website, etc.

Too bad there isn’t anyway to search by certificate number, that would be a nice addition.