Advertiser Disclosure

Personal Loans

First Midwest Bank Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

APR

6.65%
To
15.44%

Credit Req.

680

Minimum Credit Score

Terms

12 to 60

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

With locations in Iowa, Illinois, and Indiana, First Midwest Bank is a great option for borrowers that are looking for personal loan and want the comfort of working with a traditional brick-and-mortar bank.... Read More

First Midwest Bank personal loan details
 

Fees and penalties

  • Terms: 12 to 60 months
  • APR range: 6.65% to 15.44%
  • Loan amounts: $5,000 to $25,000
  • Origination fee: None
  • Prepayment fee: None
  • Late payment fee: 5% or $10, whichever is greater
  • Other fees: $100 documentation fee

First Midwest Bank is a brick-and-mortar institution that has a personal loan available online with competitive rates and limited fees. This is unique in the online lending space. Often, it’s the online-only lenders with no physical locations that have the best deals on rates and fees — they’re able to pass on the savings from not having the overhead of physical branches.
First Midwest Bank gives you the best of both worlds — affordable loan products and in-person banking support if that’s something you value.

Eligibility requirements

  • Minimum credit score: Not specified.
  • Minimum credit history: Must have good credit to qualify with at least five years of history
  • Maximum debt-to-income ratio: Not specified.

In order to qualify for a First Midwest Bank loan, you need to:

  • Be at least 18 years or older
  • Be able to provide a current ID
  • Be able to provide a tax identification number or a Social Security number
  • Provide proof of employment or income

The First Midwest Bank lending area includes Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and Wisconsin.

As mentioned above, First Midwest Bank isn’t in the business of lending money to the subprime market. You need to have good credit or better to qualify. You also need five years or more of credit history. Your credit history should have no bankruptcies, foreclosures, repossessions or other adverse history.

Applying for a personal loan from First Midwest Bank

The application process for First Midwest Bank can be done online or over the phone. Here’s how it works:

Go to the First Midwest Bank website. On the loan page it gives you the option to apply online or to call and speak with a loan specialist.

Provide your information. You’ll be asked identifying information about yourself like your name, age, address and Social Security number. You also need to tell the bank why you need the loan and how much you need.

Wait for a decision and get funding. The decision on your application may be made within 24 hours. The application process and funding of your loan may take three business days, depending on how long it takes you to submit supporting documents for the application.

Pros and cons of a First Midwest Bank personal loan

Pros:

Cons:

  • Low rates. First Midwest Bank has a competitive interest rate range of 6.65% to 15.44% APR. Again, you need to have good credit to qualify — the lowest rates usually go to borrowers with the best credit. Again, you need to have good credit to qualify — the lowest rates usually go to borrowers with the best credit.
  • Low fees. Aside from the $100 documentation fee, there aren't any fees to worry about as long as you make your payments on time.
  • Manage your loan and bank accounts in one place. If you qualify for a loan, you can choose to handle your other banking needs all in one place because First Midwest Bank is a full-service financial institution. Checking and savings accounts are available through online banking.
  • Quick decisions and funding. A decision on your loan can be made in one day and funding can happen within one business day.
  • Good credit required. First Midwest Bank is looking for borrowers with good credit.
  • Limited loan amounts. You can borrow between $5,000 to $25,000. If you need to borrow less than $5,000 or more than $25,000, this loan may not be the one for you.
  • Limited service area. You won’t be able to qualify for this loan if you don’t live in a state where First Midwest Bank currently offers service.

Who’s the best fit for a First Midwest Bank personal loan

The First Midwest Bank is going to be best for someone who lives in the bank’s service area and can meet credit history conditions. If you’re eligible, this is one of the most affordable loans around. Interest rates are competitive, and you can get a quick decision. With that said, borrowers who need a very low or large sum of money may find the loan amounts offered by First Midwest bank restricting.

If your credit score or history doesn’t qualify you for this loan, there are other options to consider that accept borrowers with lower credit scores. You can also review the best online personal loan options for people with different credit profiles.

First Midwest Bank consumer reviews

Better Business Bureau A+ rating, 4.9 of five stars in 1,669 reviews on LendingTree, our parent company. Reviewers rate First Midwest Bank five stars for customer service, responsiveness, interest rates and fees and closing costs. Customers give the bank high marks for fast, easy loan processing and helpful, courteous staff.

“Just funded a loan I applied for four days ago!,” one reviewer wrote. “The application process, the review process, the underwriting process and the customer service was the best I’ve experienced with any bank! And I couldn’t find a better rate or cheaper closing costs anywhere in the country! First Midwest Bank is the real deal.”

First Midwest Bank FAQ

The bank offers a full array of loans, from personal loans, home equity loans, mortgages, auto loans and more.

Paying off high-interest credit cards, paying for a big medical bill, and paying for home improvements, vacations and weddings are among the many uses of personal loans.

First Midwest Bank offers a “Believer Loan” tailored for those who don’t have excellent credit, lots of equity in their home or collateral some banks require. A Believer Loan helps establish savings and good credit. Borrowers purchase a certificate of deposit equal to the amount of their loan. The CD will be yours once you’ve paid the loan off.

A personal loan for consolidating credit card debts might help you take control of your payments, lower your interest rate and monthly payments, and give you the added convenience of paying one bill each month.

Alternative personal loan options

Upgrade

Upgrade
APR

7.99%
To
35.89%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.50% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upgrade is an online lender that offers fairly priced personal loans for a term of either 36 or 60 months.... Read More .

Upgrade lets you borrow from $1,000 to $50,000. Although there’s an origination fee, the low end of the Upgrade interest rate range is competitive, but the best rates are typically given to those with the best credit. It can take up to four business days to get funding.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

Marcus by Goldman Sachs® is a no origination fee loan also with competitive interest rates available. With Marcus by Goldman Sachs, you can borrow from $3,500 to $40,000. This is lender does a soft pull during the prequalification process.

Avant

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

Avant has an interest rate range that starts slightly higher than the competitors on our list. Loan amounts range from $2,000 to $35,000. You can prequalify with a soft pull here as well. The Avant loan has an origination fee of up to 4.75% to consider when factoring in costs. You can get funding in as little as one business day.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Deborah Huso
Deborah Huso |

Deborah Huso is a writer at MagnifyMoney. You can email Deborah here

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Up to $50,000

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Upstart Personal Loan Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

APR

4.68%
To
35.99%

Credit Req.

620

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

0.00% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

Upstart personal loan details
 

Fees and penalties

  • Terms: 36 & 60 month terms
  • APR range: 4.68% to 35.99%
  • Loan amounts: $1,000 - $50,000
  • Time to funding: If you accept your loan before 5 p.m. EST Monday through Friday, you should receive your loan proceeds the next business day. If accepted after 5 p.m. EST Monday through Friday, you should receive your loan proceeds two business days later.
  • Hard pull/soft pull: Soft Pull for your quote rate, but a hard pull once you accept your rate and proceed with the loan application
  • Origination fee: 0.00% - 8.00% of the target amount (deducted from the loan before it’s delivered)
  • Prepayment fee: None.
  • Late payment fee: The greater of 5% monthly past due amount monthly past due amount or $15 (per occurrence)
  • Other fees: Return check or refund feed ($15) and paper copy fees ($10)

Upstart offers fixed-rate loans, but the loan interest rate depends on the borrower’s education, credentials, work history and credit score. Your loan can be used for a wide variety of purposes including (but not limited to) paying off credit card debt, paying off student loan debt, medical bills, travel, starting a business or paying for college or grad school.

Borrowers can even use Upstart loan funds to attend a coding boot camp. Upstart supports funding for a few coding boot camps (see the full list here) so if an applicant is accepted, they won’t need to possess a 4-year degree or have a job offer.

If you already have an Upstart loan and you’d like to apply for an additional loan, you’ll need to meet the following qualifications:

  • Made on-time and consecutive monthly payments for the past six months
  • Have no more than one outstanding loan through Upstart at the time of application
  • Have no more than $50,000 of outstanding principal at the time the loan originates

In order to receive your loan funds, you must add and verify a personal bank account in your name; from there, you’ll need to disburse the funds from your checking account so you can spend as needed.

However, this may be an inconvenience for people looking to consolidate their debt by applying loan funds directly to the creditor or business owners looking to deposit the funds automatically to their business account. For example, if you’re receiving a large lump-sum loan to cover the cost of college tuition for the semester, you’ll have to have the discipline to make sure the payment goes directly to the school and you avoid spending part of the money on another expense.

Speaking of Upstart loans that are being used for educational purposes only, keep in mind that there is an additional three-day business period between when you accept your loan and when you will receive the funds.

For loans intended for other funding purposes, Upstart will usually grant funds by the following business day, as stated above.

Eligibility requirements

  • Minimum credit score: 620 FICO or Vantage score
  • Minimum credit history: Will accept clients with insufficient credit history to generate a credit score
  • Maximum debt-to-income ratio: Not provided

While Upstart’s website doesn’t get into too much detail about the debt-to-income ratio or minimum credit history requirements, we do know that the company checks how much debt you have in relation to the income you receive.

In order to qualify for a loan, you must not have any accounts currently in collections or delinquent, or any bankruptcies or public records on your report. You must also have fewer than six inquiries on your credit report in the last six months, not including inquiries related to student loans, vehicle loans or mortgages. You cannot reside in West Virginia or Iowa.

Other qualifications include:

  • Minimum age of 18 (Residents of Alabama and Nebraska must be at least 19.)
  • U.S. citizenry or permanent residency
  • Valid email account
  • Ability to verify name, date of birth, Social Security number
  • Possession of a full-time job, full-time job offer starting within 6 months, a steady part-time job or other source of regular income
  • Possession of a U.S. bank account

While Upstart’s website states that you can borrow between $1,000 and $50,000. However, when you read the fine print, you’ll notice there are a few state-specific minimum loan amounts. The three state limitations are shown below.

  • Georgia: $3,100 minimum
  • Massachusetts: $7,000 minimum
  • New Mexico: $5,100
  • Ohio: $6,000 minimum

Applying for a personal loan from Upstart

Upstart’s personal loan application process is set up to be simple and quick. You’ll start by submitting a rate inquiry on Upstart’s website. Just click on the “Check Your Rate” button in the center of the page. This takes only a few minutes and you’ll answer some basic questions.

If you accept your rate, you’ll be prompted to complete an online application. Here, you may have to provide evidence of your bank account and upload supporting documents, which could include verification of your employment and work experience, academic credentials and credit information.

Once your application is approved, you will be asked to review final disclosures and sign a promissory note.

From there, you can receive your loan funds the following business day if you accept your loan before 5 p.m. EST Monday through Friday. If you accept your loan after 5 p.m. EST Monday through Friday, you will receive your loan funds two business days later.

Borrowers can set up easy and automatic monthly payments and even pay their loan off early without penalty.

Pros and cons of an Upstart personal loan

Pros:

Cons:

  • Lower fixed rates: Upstart offers loan rates as low as 4.68%, meaning borrowers who qualify for low rates could save money when consolidating credit card debt with a personal loan.
  • Quick access to funds: Borrowers can receive funds in as little as one business day after loan approval.
  • Unique selection process: Upstart considers applicants on a variety of factors including credit score, credit history, employment status, academic history and area of study
  • Soft Pull to check eligibility : Upstart determines eligibility and offers you a loan rate with a Soft Pull.
  • Origination fee: Loan origination fees can be 0.00% - 8.00%. These will be deducted from the loan prior to delivery.
  • Limited repayment term options: While you can choose to pay off your loan early, you can only choose from terms of 36 & 60 months.

Who’s the best fit for an Upstart personal loan?

Upstart is a reasonable solution for those in their 20s or college grads who are having a difficult time obtaining a personal loan elsewhere. The process is convenient and can be solely completed online. Upstart can also be a solid option for borrowers who haven’t developed a strong credit history.

You’ll need a minimum credit score of 620 to meet the credit qualification, but you can also strengthen your application with your employment status, job history and academics. While Upstart’s interest rates are competitive with other peer-to-peer lending companies, other competitors rely heavily on credit to approve applicants while Upstart doesn’t.

Upstart would also be a great option if you’re looking for funding to attend a coding bootcamp, since eligibility requirements are very lenient.

Lastly, if you meet the eligibility requirements and need a loan quickly, you can have funds in your personal account by the next day. If you need funds to help you pay off debt or finance a large purchase, and can comfortably pay back the loan within five years or less, Upstart’s personal loan could also be a good fit.

But if you’re unsure about Upstart, our lender marketplace is a great place to compare lenders, terms and more in one spot.

Upstart consumer reviews

Upstart has an A+ rating with the Better Business Bureau (BBB) and has been accredited since 2015. Among LendingTree reviewers — MagnifyMoney is owned by LendingTree — 76 percent of borrowers recommend Upstart, though most of those recommendations came prior to 2016. While most users noted Upstart customer service’s politeness and courteousness, fewer recent reviewers were happy with loan application outcomes and reported applying for loans unsuccessfully and, as a result, receiving a negative impact on credit reports they were actually trying to improve in applying for debt consolidation loans through Upstart.

A number of reviewers reported experiences of receiving an initial soft offer followed by denial once their credit reports had been pulled. “Now I have another hard inquiry on my credit report and no loan,” noted applicant Ian from Westfield, N.Y. back in March 2018. “For people in the same situation as [I am] who are trying to improve their credit, trying to get out of debt with a credit card consolidation loan, trying to lower [their] monthly payments, this is extremely frustrating!! This made my credit rating worse!”

However, in Upstart’s defense, no soft credit approval with a lender is a guarantee of approval after a hard credit check.

Prior to 2016, LendingTree reviewers routinely provided positive reviews of Upstart, citing its easy application process, speed of approval, and speed of funds delivery. “The application process was very simple,” Tara from Rockville, Md. noted in an August 2015 review. “I received a call to verify my information within the hour on a Sunday and was approved within 15 min after the call. I had money in my account within 2 days. It was the fastest, easiest loan I’ve ever applied for.”

Meanwhile others cited Upstart’s attention to individualized customer service: in an August 2015 review, L.C. from New York City found that the company “cares about your financial situation.”

“Instead of just approving me for a loan,” the review continued, “they talked with me about my situations and options—to ensure that I was making the optimal decision.”

Upstart FAQ

Upstart offers personal loans as well as loans for debt consolidation, student loans, vehicle purchase, and other personal expenses.

Your credit history (if you have one), as well as your education, work history and credentials all help determine the interest rate you’ll receive. The lower your risk, the lower interest rate you’ll receive.

At a minimum, you will need to supply your name, address, and social security number. You may also need to provide pay stubs, tax returns or college transcripts.

You can use your personal loan for almost anything, including debt consolidation or to make a large purchase for which you don’t have the funds, such a vehicle, home improvement project or wedding.

Yes, you can if you have made on-time payments on your current loan for at least six months, have no more than one other loan with Upstart, and I have no more than $50,000 of outstanding principal on your current loan.

Upstart offers a 10-day grace period before assessing late fees. If your payment falls outside that 10-day grace period, you may be charged a fee equivalent to 15% of the unpaid amount or $15, whichever is greater.

Yes, if your account is current, and it’s at least 15 days until your next payment due date, you can schedule two automatically recurring payments per month.

Alternative personal loan options

LendingClub

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

LendingClub is a peer-to-peer lending platform, which means borrowers are paired with and receive funds from individual or institutional investors. Interest rates range from 6.95% to 35.89% APR and you can borrow up to $40,000.

If you have good credit, you may be able to qualify for a lower interest rate that Upstart can’t offer. You can also check your rate without adding a hard inquiry to your credit profile so you can see what you’d qualify for.

Earnest

Earnest
APR

6.99%
To
18.24%

Credit Req.

680

Minimum Credit Score

Terms

36 to 60

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Instead of offering credit-based loans, Earnest has taken a very nontraditional approach using a merit-based system.... Read More

Earnest is a personal loan lender offering fixed-rate loans starting at 6.99% APR. With Earnest, you can borrow between $5,000 and $75,000 on 36 to 60 month terms. No origination fee with this personal loan also helps make this lender more affordable. Loans are offered throughout the U.S., but not available in Alabama, Delaware, Kentucky, Nevada and Rhode Island.

Similar to Upstart, Earnest considers your employment history, education, and salary when considering you for a loan. You will need a minimum credit score of 680 to qualify but again, a good credit score could qualify you for a lower interest rate that Upstart doesn’t offer.

Peerform

Peerform
APR

5.99%
To
29.99%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Even with a credit score of 600, you still might be able to secure a loan through Peerform. ... Read More

Peerform is another peer to peer lending site that offers personal loans to borrowers with a minimum credit score of 600. This could be a worthy alternative if you don’t think you’ll meet the credit score requirements to qualify for a loan with Upstart.

Interest rates for loans through Peerform range from 5.99% to 29.99%, and you can borrow up to $25,000. The maximum repayment terms are 36 or 60 months, and loans have a 1.00% - 5.00% origination fee.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Deborah Huso
Deborah Huso |

Deborah Huso is a writer at MagnifyMoney. You can email Deborah here

Chonce Maddox
Chonce Maddox |

Chonce Maddox is a writer at MagnifyMoney. You can email Chonce at [email protected]

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Up to $50,000

$

Won’t impact your credit score

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Banking

Understanding the FDIC Insurance Limit and How to Maximize Your Coverage

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

iStock

We’ve all seen that gold FDIC logo in the bank window advising us “each depositor insured to at least $250,000.” But how often have you thought about what that signage really means, and have you paused to think about whether or not your funds exceed the FDIC insurance limit?

After all, if you consider checking, savings, money market, CDs and retirement accounts, your total deposits may add up pretty quickly.

The good news is your deposits are more protected than you likely realize, and there are simple ways to protect your money, no matter how much you have, in the event of a bank failure. In this post, we’ll cover what the FDIC insurance limit is and how you can maximize your coverage.

What does the FDIC do?

The origins of the Federal Deposit Insurance Corporation go back to the Great Depression when Congress passed the Glass-Steagall Act to prevent both a run on the banks (a common occurrence prior to 1933) and to protect American depositors from ever again suffering the $1.3 billion in consumer losses from bank failures between 1929 and 1933.

Over the course of its 86-year history, the FDIC has protected the money of millions of depositors when American banks have failed, and no depositor has lost funds held at FDIC-insured banks.

The FDIC insures 14 different account ownership categories, including the following common types of accounts:

  • Single accounts
  • Joint accounts
  • Revocable trust accounts
  • Irrevocable trust accounts
  • Certain retirement accounts
  • Employee benefit plan accounts
  • Business/organization accounts

While many traditional banks and online banks are FDIC-insured, credit unions use a different type of coverage through the National Credit Union Administration (NCUA). There are nine states, however, that do not require credit unions to have primary deposit insurance with the NCUA; instead they can obtain coverage through private insurers. If you have deposits in a credit union instead of a bank, make sure you know what type of insurance that credit union holds.

Keep in mind your bank might be owned by a parent company that holds the FDIC insurance guarantee. For example, online bank SmartyPig.com is actually owned by Sallie Mae Bank, so Sallie Mae is the FDIC-insured entity for which you’d need to search using the FDIC’s Bank Find.

What is the FDIC insurance limit?

The FDIC protects consumers in the event of a bank failure, offering up to $250,000 in insurance coverage for each ownership category. In other words, if you have a personal checking account, a personal savings account, a joint checking account, and a CD at your bank, each of those accounts is automatically insured up to $250,000. That’s $1 million in total coverage at a single bank.

Let’s say you have those same four accounts at another bank. Those four accounts will also benefit from up to $250,000 in FDIC insurance for each ownership category, thus offering you another $1 million in protection in the event of a bank failure.

You can use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) tool to determine the amount of insurance coverage you have for all types of bank accounts.

How to get more FDIC coverage

It’s actually relatively easy to increase your FDIC coverage.

The key, says Ken Tumin, founder of LendingTree-owned DepositAccounts.com, is understanding ownership categories.

For example, if you have a personal savings account in your name and then also hold a joint savings account with your spouse, both of those accounts are eligible for $250,000 in FDIC coverage for a total of $500,000 in insured funds.

Another option, Tumin explains, is establishing trust accounts with beneficiaries. Each beneficiary of one of these payable-on-death accounts is eligible for $250,000 in FDIC coverage. Thus, if you have four beneficiaries on an irrevocable trust account, that’s a total of $1 million in FDIC insurance.

And while most consumers know they can also spread funds out across more than one bank to increase FDIC coverage, there is the hassle factor of not having all of your money in one place.

According to Tumin, that’s where the Certificate of Deposit Account Registry Service (CDARS) comes in handy. CDARS allows you to distribute your CDs across multiple, in-network banks but work with only one bank.

If you need to keep funds liquid but still want greater FDIC coverage, then Tumin recommends using Insured Cash Sweep (ICS). ICS allows you to spread your money across multiple checking or money market accounts, for example, while still dealing with only one bank.

What if your bank fails?

So what happens if your bank fails? It’s not as uncommon as you might expect or hope. During the most recent recession, more than 500 banks failed. The good news is that FDIC or NCUA coverage should kick in automatically, leaving consumers nothing to do but wait for their covered funds to be returned.

If it happens to your bank, the most typical scenario is for the FDIC to arrange for another bank to assume all the failed bank’s deposits.

“So if you had $100,000 at Bank A, then Bank B will assume that deposit,” Tumin says. “This happens automatically; there is nothing the consumer needs to do.”

If the FDIC cannot find another bank to acquire the deposits of a failed bank, such as in the case of fraud, then the corporation will close the bank and mail checks to the depositors for their insured deposits. Tumin says the FDIC generally mails those checks within a week or two of the bank’s failure.

As great a benefit as FDIC insurance is, Tumin says it’s important to remember it won’t cover deposit accounts held by brokerage houses, for example. The FDIC only insures banks. Thus, it’s important to review all of your deposit accounts, determine what kind of financial institution is actually holding them, and ensure your beneficiaries are up-to-date in order to maintain the maximum FDIC coverage available to you.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Deborah Huso
Deborah Huso |

Deborah Huso is a writer at MagnifyMoney. You can email Deborah here

TAGS: