FDIC

A money market fund is an open end mutual fund that invests in short term debt securities. Money market funds are also known as principal stability funds. This type of investment is in the money market and the key objective is the conservation of principal, accompanied by humble dividends.

Money market funds are often used by financial institutions to store money that is not currently invested and thus, money market funds are highly liquid investments. Most deposits into a money market fund are not FDIC insured, but the risk still remains to be extremely low. Money market funds are among the safest types of mutual funds because by law, they are required to invest in low-risk securities.

It’s important that you save as much money as possible in these current economic times of trouble. Every day there’s more bad news – unemployment rising, companies declaring bankruptcy, trade grinding to a halt. No one should take their jobs for granted, so it makes sense to stockpile as much cash as possible in case, heaven forbid, you should lose your job too and be stuck with the usual raft of bills and responsibilities, but no revenue to deal with them. Traditionally people have put their extra money into savings accounts, and while there’s a lot to be said for them, there are indeed alternatives to savings accounts that can make you more money. A lot more money. If you’re interested in alternatives to savings accounts, read on for some more tips, ideas and suggestions.

Savings accounts are great places to “store” money so that you don’t spend it. In addition, the best savings accounts will offer you competitive interest rates. However, there are alternatives to savings accounts that serve the same purpose, give you the same access to your money, and could make you more money than a savings account. You could put your money into a certificate of deposit (CD), for example. CD’s are great ways to save money and make money at the same time. With a CD, the more money you put into it the higher your interest rate will be. You can also rest easy knowing your money is insured by the FDIC, up to $250,000. You could also put your money into a money market fund (which is not protected by the FDIC) or a money market deposit account (which is). These alternatives to savings accounts could make you more money than a traditional savings account.

The news describing the current state of the United States economy is extremely frightening. Credit is tough to come by, jobs are being loss, the real estate market is in shambles and banks keep failing and closing. As an American consumer, you probably have involvement in some of these economically distressed sectors. One thing that can help put your mind at ease is knowing that your bank account is protected and how that is done.

Economic times are scary. Banks are folding, the economy is in a downward spiral and jobs are being lost all over. Since you are fortunate enough to still have a steady stream of income, you are primarily concerned with saving as much as possible and ensuring that you stay financially intact during these rough an unstable times. With a variety of accounts, including a transaction account, you are rightly curious if all checking accounts (aka transactional accounts) are insured.

There are many different types of certificate of deposit accounts, but the ones we most commonly refer to as CDs are usually personal CD accounts.

What is a Personal CD Account?

A personal CD account is similar to a personal savings account: it is insured by the FDIC and usually has a fixed interest rate. The main difference is that, unlike a savings account, a CD is a type of time deposit, which means that when you take out a CD from your financial institution, you do so for a specific, fixed term – for example, one, five, or ten years. When you put money in a CD, you are making a commitment to let the bank hold your money for the entire length of the specified term. You should be aware that there are generally stiff penalties for early withdrawal from a CD account.

Generally, a personal CD account will have higher interest rates than a business CD account. A larger principal should also receive a higher interest rate, and a longer term loan also generally carries a higher interest rate, depending on market conditions and the current yield curve. Smaller institutions will generally try to attract investors with the best certificate of deposit rates, because they can offer higher rates than larger institutions.

You may have heard of “FDIC-insured deposits,” and wondered what it means exactly? FDIC stands for the Federal Deposit Insurance Corporation, which was created in 1933 in response to the severe bank panics brought on by the Great Depression.

During the 19th century, bank panics were relatively common: when economic downturns and unemployment caused consumer confidence to plummet, many investors would panic about the safety of their money, and withdraw their cash from the banks. After the “Panic of 1893,” when the failure of several banks involved in shaky railroad financing caused a run on the banks, the federal government began to draw up plans to create better security for bank deposits, since bank runs had the effect of making the economy worse. So they created an institution that would guarantee deposits held by commercial banks.

The FDIC provides deposit insurance to guarantee the security of checking and savings deposits to its “member” commercial banks. You can tell which banks are members of the FDIC because they display an offical FDIC logo at each teller window.

A fixed rate certificate of deposit (or CD) is a type of investment product offered by banks and other institutions, which is very similar to a checking or savings account. However, when you purchase a CD, you are making what is called a “time deposit” in the bank – a deposit which you cannot touch for a specified period of time, and which bears interest which is compounded periodically.

A fixed rate CD is the most common type of CD. Variable rates, “bump-up” rates, and rates tied to an index such as the stock market, are less common. However, a fixed rate CD offers you the security of knowing that your interest rate will not fluctuate over the life of the investment. When interest rates are high, you can lock in the best CD rates and keep them over the life of the CD. In that respect, even though the interest rate of the CD is generally considered low when compared to some other investments, buying a certificate of deposit is usually considered one of the least risky investments out there.

The fight to stave off more foreclosures just got a much-needed idea! This past Friday, FDIC Chairwoman Sheila Bair revealed her strategy to assist 2.2 million borrowers’ secure new loans and ultimately help 1.5 million people keep their homes.


The proposal suggests that delinquent homeowners would get a much-needed shift in the amount of their mortgage payments. Those who are two months or more past due would have their payments shifted to a more manageable 31% of their gross monthly income under the terms of their new loans. You can use a mortgage calculator to see how a program like that would impact your monthly payments.

Additionally, the plan offers not only a financial incentive of paying loan providers $1000 for reworking mortgages, but also a strategy of the government sharing the financial burden that has previously scared off lenders from rolling up their sleeves and pitching in to help. Bair suggests that the government would take a 50% responsibility of the losses if a borrower taking advantage of the assistance defaults.

Bank customers will see a temporary increase in FDIC coverage to $250,000 per depositor.

Included in the Emergency Economic Stabilization Act of 2008 was the provision for increasing Federal Deposit Insurance Corp. protection per depositor to $250,000 through December 31, 2009. The previous limit of $100,000 has been around since 1980 and was probably long overdue for an increase. The legislation provides that the coverage return to the lower limits at the end of next year, an unlikely event.

Another bank bites the dust. Citigroup agreed to a takeover of the troubled Wachovia in yet another government engineered rescue.