The FDIC Transaction Account Guarantee (TAG) Program
Laura Adams, MBA
Ask Money Girl: What is the FDIC Transaction Account Guarantee (TAG) Program?
Ask Money Girl: What is the FDIC Transaction Account Guarantee (TAG) Program?Q. I recently received a letter from my bank stating that it was discontinuing it’s coverage under the FDIC Transaction Account Guarantee Program. What exactly does this program entail, and will my accounts still be insured once my bank has opted-out of this coverage?
Answer. The Transaction Account Guarantee (TAG) program was created in response to the financial crisis to help settle the nerves of depositors with large bank accounts. It allows participating banks and financial institutions that have non-interest bearing accounts, like some checking accounts, to offer unlimited FDIC coverage, instead of the regular $250,000 coverage per depositor. The additional TAG insurance doesn’t apply to interest-bearing checking accounts, savings accounts, money markets, or CDs.
The TAG program has been extended through the end of 2010, but participating institutions had a one-time opportunity to opt out of it by April 30, 2010 and let their coverage expire on July 1, 2010. Over 1,000 institutionsopens EXCEL file decided to get out and save money on the rising expense of the program. If your bank discontinued TAG insurance and you have an account that doesn’t earn interest, then your coverage has simply been reversed back to the FDIC’s general deposit insurance rules. For most people, that isn’t a big deal, because if they had over $250,000 in cash it probably wouldn’t be sitting idle in a non-interest bearing account!
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.