Well, there’s some good news and some bad news about investing your money in certificates of deposit (CDs) these days. On one hand, you need not worry as much about the FDIC limits on your deposits. On the other hand, rates are still in the gutter. You win some, you lose some.
Last month, a provision of President Obama’s housing bill extended the quarter-million dollar limit on federal deposit insurance until the end of 2013. The limit is usually one hundred thousand dollars. Back in October, it was increased in an attempt to boost consumer confidence and try to get people investing in the sluggish economy again. The increase was only scheduled to last through December of this year, so the extension ought to be reassuring to consumer who tied up larger amounts of money in CDs that do not mature until after the New Year. In fact, joint savings accounts are actually covered up to five hundred thousand dollars, as long as both consumers invested in the account have equal rights of withdrawal. Theoretically, a couple could securely invest a full million dollars at one bank right now: a quarter-million apiece in individual accounts, and then half a million in a joint account.
Of course, the tragically low CD rates right now make it pretty unlikely that a couple will be making much of a return on their million dollars – or any amount greater or lesser, for that matter. Financial experts are recommending that consumers avoid long-term CDs altogether, in favor of laddering several certificates that last for one year or less.
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