The Federal Deposit Insurance Corporation (FDIC) insures the safety of checking and savings deposits in member banks up to $250,000 per depositor per banking institution (not per bank branch). If a board places $500,000 of its reserves in a single bank (for a jumbo CD so as to receive a greater return on its money) and the bank fails, the association would lose $250,000.

RECOMMENDATION: Boards should not exceed $250,000 per financial institution (unless the bank has private insurance to cover the monies). Instead, they should spread their association's money across various FDIC insured institutions. One way to conveniently spread the monies is to use banks who are part of the CDARS program. See the FDIC website for more information about insured institutions.