||Ask the Dollar Diva
Where do I go for safe, federally
Dear Dollar Diva,
I have a little over $1 million in an account with GE Interest Plus
which is paying 6.75 percent. I just learned that this money is
not insured by the FDIC. Where can I put my money so it will be
safe and insured and also earn 6.75 percent or better?
You're invested in GE Capital Corporation unsecured
debt, and it's not insured. If you want FDIC insurance, you have
to put your money in a bank.
Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation is an independent agency
of the U.S. Government, established in 1933 to protect depositors
against bank failures. It's one of the few things in life you can
actually count on; if your bank goes belly up, and your deposit
is FDIC insured, you will get your money. The are no hidden clauses
or fine print to worry about.
But don't put all your eggs in one
basket; FDIC limits insurance to $100,000 per depositor.
If you have $200,000 in a bank, even if it's divided
into two separate accounts of $100,000 apiece, you
will only be insured for $100,000 if the bank fails.
However, retirement accounts are insured up to $250,000.
You're lucky to have accumulated a million dollars,
but you'll have to spread the wealth among a number of banks in
order to have your deposits insured. Don't worry, Bankrate.com
will help you find the FDIC insured banks paying the best rates,
and you'll be pleasantly surprised to find many paying better than
Diva alert: not every bank and saving association
is FDIC insured. Be sure to check before you make your deposit.
Series I Bonds
Although not insured, per se, U.S. saving's bonds
offer the safety of being backed by the full faith and credit of
the United States government. Series I savings bonds are currently
paying 7.49 percent, and are indexed for inflation. Interest is
compounded and tax-deferred until the bonds are redeemed. But you've
got to hold them for five years or you forfeit three month's interest.
To learn more about Series I savings bonds, read the Diva's "Do
Series I bonds belong in my portfolio?"
-- Posted: Oct. 25, 2000