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-- Posted: Oct. 25, 2000

Dorothy Rosen -- The Dollar Diva Ask the Dollar Diva

Where do I go for safe, federally insured savings?

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.

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Federal Deposit Insurance Corporation

The 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 6.75 percent.

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?"

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