See if Your Cash Is Insured by the FDIC

A mattress is not a savings account. But lately I don't blame anyone for thinking it's the safest place to stash their cash. With financial institutions getting clobbered faster than Whac-a-Moles at a carnival, suddenly any other savings option seems more attractive than a bank.

But don't slice through your Serta and ask your bank teller to liquidate your account (small bills, please) until after this brief bank deposit insurance lesson.

Suddenly the Small Print Matters

Never before has a disclaimer gotten more attention -- you know, that quickly uttered "FDIC insured" line in the last nanosecond of those bank commercials. Even if your bank was one of the fallen giants -- IndyMac, WaMu (as of press time, that is) -- all is not lost. In fact, nothing at all may be lost, thanks to the insurance offered by Uncle Sam under the Federal Deposit Insurance Corporation (FDIC) and the recent temporary bump up in coverage. Here's what that stamp of safety gets you:

• What is covered: FDIC insurance covers checking accounts, savings accounts, certificates of deposit, and money market accounts. Stocks, bonds, mutual funds, and money market funds are not covered.
• How much is traditionally insured: Before the passage of the bailout plan, coverage limits were as follows: up to $100,000 per solely owned account (meaning just your name is on it). On joint accounts (e.g., you and your spouse are joint holders), you get $100,000 in coverage per person. So if you and your honey have $200,000 stashed away, it is fully insured under FDIC rules. IRAs and certain other retirement accounts are covered up to $250,000. And revocable trust accounts are insured up to $100,000 for the interests of each beneficiary (subject to specific limitations).
• Current coverage limits through December 31, 2009: If you were bumping up against those limits, here's good news: The bailout bill included a temporary increase in the insurance cap. So, at least until December 31, 2009, your deposit accounts are FDIC insured up to $250,000 ($150,000 more coverage than before) per depositer. The increase allows the FDIC to borrow from the Treasury should it be unable to cover any losses that might occur.
• Calculate your coverage: Use FDIC's Electronic Deposit Insurance Estimator to see how much insurance you've got, or call 1-877-ASK-FDIC to find out if your bank is covered.
• How to find an FDIC-insured bank: Remember, the coverage is per bank. So if the amount of money you have in one bank exceeds the FDIC coverage amount, you should move the excess to a completely different FDIC-insured bank (not just another branch) so your savings is covered in its entirety. Use the FDIC's Bank Find tool to find institutions that are indeed insured.

If the FDIC does take over your bank, the good news -- convenience-wise at least -- is that you will still be able to access your money. The institution’s ATMs will still work, direct deposits will still post to your account, and checks you wrote will be able to be cashed. The FDIC's consumer website has a "failed bank" section with specific information about the banks that went under or were acquired.

Fool.com finance columnist Dayana Yochim is making up for being a remedial Girl Scout by following the "safety first" mantra. In other words, she checked to see if her bank was FDIC-insured way back in February.