Personal Banking

FDIC Transaction Account Guarantee Program

Protecting Your Accounts

What is the FDIC Transaction Guarantee Program?

The FDIC Transaction Account Guarantee Program (part of the Temporary Liquidity Guarantee Program) provides full deposit insurance coverage for all funds in non-interest bearing transaction deposit accounts held by FDIC-insured banks. This unlimited insurance coverage is temporary and will remain in effect for participating institutions until December 30, 2010. As an example, personal and business checking accounts that earn an interest rate or yield at or below 0.25 percent are fully insured for the entire amount in the deposit account under this program.

What is the FDIC Transaction Guarantee Program?

A "non-interest bearing transaction deposit account" is defined as a transaction account with respect to which interest is neither accrued nor paid and on which the insured depository institution does not reserve the right to require advance notice of an intended withdrawal. This definition encompasses traditional demand deposit checking accounts that allow for an unlimited number of deposits and withdrawals at any time. This definition does not encompass interest bearing money market deposit accounts (MMDAs). The FDIC is additionally including in the definition of a non-interest bearing transaction account:

• Accounts commonly known as Interest on Lawyers Trust Accounts (IOLTAs) and functionally equivalent accounts will continue to be eligible for the extension of unlimited insurance coverage above regardless of interest rate.

   

• Negotiable order of withdrawal accounts (NOW accounts) with interest rates no higher than 0.25 percent for which the insured depository institution at which the account is held has committed to maintain the interest rate at or below 0.25 percent. Presently NJM Bank has not committed to maintaining NOW account interest rates at or below 0.25 percent, and therefore these accounts continue to be excluded from the extension of the unlimited insurance coverage noted above. These accounts continue to be covered under traditional FDIC insurance coverage.