FDIC Limits and How to Insure Excess Deposits

Peace of mind. That’s what you want when you place your money in a bank or savings institution. You want to know that your money is safe and sound, and chances are you’ve heard about FDIC insurance and know that it’s there to protect your dollars. What you may not know is exactly what the coverage limits are with FDIC insurance, and that there are full-coverage options available for your deposits – outside of the FDIC.fdic-limits-insure-excess-deposits

Most U.S. banks are members of the FDIC, or the Federal Deposit Insurance Corporation. The purpose of the FDIC is to protect your deposits in the event of a bank failure. If an FDIC-insured institution fails, each customer there will have their deposits protected, up to $250,000. FDIC insurance covers all types of deposit accounts, including certificates of deposit (also known as CDs), checking and savings accounts, as well as money markets and some types of retirement accounts. It does not however cover investment accounts such as stocks, bonds or mutual funds, or life insurance policies, even if you purchased those products from an FDIC-insured bank.

FDIC insurance is backed by the full faith and credit of the U.S. government, and since the FDIC’s creation, no depositor has ever lost a penny of their FDIC-insured deposits. But what about depositors that have more than $250,000 in a bank account? One way to insure excess deposits is through the Depositors Insurance Fund – commonly referred to as DIF.

The Depositors Insurance Fund is a private insurance fund that provides supplemental protection for funds deposited with Massachusetts-chartered savings banks. The good news is that if you don’t live in Massachusetts, you can still reap the benefits of DIF coverage. The Depositors Insurance Fund does not impose any residency restrictions, so as long as a DIF member bankAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! accepts out-of-state deposits, you can open an account there and have your deposits covered in full.

Another way to obtain DIF coverage is to open an account with an online bank that is tied to a Massachusetts-chartered savings bank. For example, Bank5 Connect is an online bank that is a division of BankFive, a DIF member bank located in Fall River, Massachusetts. So, all deposits placed in a Bank5 Connect account are covered by DIF, regardless of which state the depositor resides in.

When you open a deposit account at a DIF member bank, DIF insurance automatically kicks in. There are no forms or applications to fill out, and there are no fees or surcharges required to obtain coverage.

In the event of a bank failure, the Depositors Insurance Fund works very closely with the FDIC. After a bank goes under, the priority for both organizations is to ensure depositors get their funds as quickly as possible. In addition, the DIF and the FDIC work together to determine what portion of the deposits are the FDIC’s responsibility and what portion will be paid out by the DIF.

To learn more about DIF coverage at Bank5 Connect, visit http://www.bank5connect.com/home/misc/fully-insured-deposits.

For more general information about FDIC and DIF coverage, go to:

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The Pros and Cons of Having Several Bank Accounts

Do the benefits outweigh the drawbacks of having multiple bank accounts?

The answer? That depends on you and your individual needs. But to get a better understanding of the pros and cons, let’s take a look at both sides of the equation.Large group of pink piggy banks

Multiple banks accounts can help you with:

  • Keeping long-term and short-term financial goals separate. It may make sense to have separate accounts for each of your major financial goals, rather than muddy the waters by lumping all of your funds into one account. Long-term savings goals might include saving for retirement or buying a home, while short-term objectives could include putting aside money for a dream vacation or home renovations.
  • Separating business finances from personal finances. A business owner is better equipped to track their company’s finances by having an account separate from their personal ones. Plus it makes sense from an accounting perspective.
  • Taking advantage of tax incentives. If you itemize your deductions, if could be helpful to have separate accounts to keep track of certain expenses like healthcare, work-related costs, or education.
  • Saving for your dependents. It’s never too early to set up accounts for your children. For instance, a savings account in their name will encourage them to do just that – save. But keep in mind that most bank accounts established for a minor will have to be held jointly with a parent or guardian.
  • Creating an emergency fund. Financial experts recommend setting aside three to six months of regular income for emergency situations. Placing that money in a separate savings account would be a wise move, especially if the account yields high interest.

So what are some of the drawbacks of having too many accounts?

  • More accounts to monitor. Any bank account you have needs to be checked on a regular basis to ensure you don’t overdraft your account, and so you can spot any errors or suspicious activity in a timely fashion. If you find it difficult to manage the accounts you already have, it’s probably not a good idea to add more accounts to the mix.
  • Could potentially result in more fees to pay. Depending on the types of accounts you’re looking to open, you could end up paying more fees each month. Before you open new accounts, be sure you fully understand what fees, if any, are associated with them, such as monthly maintenance fees, or minimum balance fees.
  • Potential impact to your credit score. For the most part, having multiple bank accounts won’t cause damage to your credit history, however there are some specific instances where it could be affected by new accounts:
    • Some financial institutions require a pull of your credit report before they will open a new account for you. This type of “hard inquiry” doesn’t generally have much noticeable impact on your credit score, but having your credit report pulled by multiple financial institutions over a short period of time could temporarily drop your score.
    • If an account reaches a negative balance and stays there for a long period of time, the bank could consider it a delinquency and refer it to a collections agency to retrieve the amount owed. The agency, in turn, may report this delinquency to the three credit bureaus, resulting in a negative mark on your credit score.

Whether you decide to utilize multiple bank accounts to manage your finances, or keep it simple with just one or two accounts, knowing the pros and cons of both options will help you to make the decision that’s right for you.

CD Laddering Helps Provide An Investment Balance

Striking a balance between having investments that provide solid returns while still having financial flexibility can be a challenge. But an approach called CD laddering can help you maintain that balancing act.cd-laddering-helps-provide-investment-balance

First, a little refresher about CDs, or certificates of deposit. A CD is also known as a “time deposit” or a “term deposit” because it’s set for a certain period of time. The depositor can choose which term they want to go into. CDs are a great way to earn a competitive interest rate and not have to think about setting money aside on a weekly or monthly basis like you would with a savings account.

Essentially, you put your money in the bank and you know that after the period of time your CD is locked into expires, you’ll be able to get your money back with interest that is guaranteed and fixed. There are short-term and long-term CDs available at most banks. Short-term CDs can range from 6 months to a year, while longer terms typically range between 18 months and 5 years.

You can access money in your CDs before they are fully matured, but be prepared to pay a penalty for early withdrawal. But this is where CD laddering can help provide financial flexibility.

CD laddering is a great way to be able to have money tucked away and earning a competitive interest rate, but also have access to the funds at regular intervals. There are a lot of different ways to approach CD laddering, depending on the individual’s investment strategy.

CD laddering involves buying a series of CDs at regular intervals so that they’ll mature at regular intervals as well. So over the course of the CDs’ maturity you have access to funds on an ongoing basis.

For instance, three CDs are opened at different maturity levels – one for 6 months, another for 12 months, and a third for 24 months. When the 6-month CD comes due, you can either cash it out or roll the funds over into another CD.

Using this approach, you regularly have a CD maturing, and its funds becoming available. If you decide you want to only use a portion of the funds once the CD matures, you could take out the interest that you’ve earned and roll over the principal into a new CD.

If you have some CDs that are shorter term with a lower interest rate and some that are longer term with a higher interest rate, you benefit because if you average out all the rates, it’s as if you had a longer term CD all along. That’s why financial experts advise having a mix of both.

Some people have found CD laddering useful as a source for emergency funds. For instance, money set aside for emergencies could be invested in a series of 6-month CDs that are opened once every month over the course of 6 months. When a CD matures, it can either be rolled over into another 6-month CD or cashed out, if necessary, for emergency purposes. Basically this creates a perpetual emergency fund, and the money that’s invested earns a higher interest rate than what would typically be earned in a regular savings account.

Generally speaking, however, CD laddering typically involves rolling over short-term CDs to longer terms at higher interest rates. In the end, you have several CDs with long terms, but they mature at regular intervals, giving you access to funds if you need them.

To learn more about the CDs that are available at Bank5 Connect, go to http://www.bank5connect.com/home/cds. And while CD laddering may fit in nicely with your overall investment strategy, remember that it’s always wise to consult with a tax advisor before making any major financial decisions.

Equifax Data Breach – What to Do after a Compromise

You’ve likely heard about the recent Equifax data breach, which is thought to affect nearly half of the country’s population. The breach at Equifax isn’t the first time sensitive personal information has been compromised, and unfortunately it won’t be the last. Data breaches are compromises are on the rise – so what do you do?
computer security breach

First, you should check with the company that suffered the breach – they may have instructions and offer free credit monitoring services. You can find more information about the Equifax breach here: https://www.equifaxsecurity2017.com/As a courtesy, you will be leaving Blog.BankFive.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of BankFive.com. Come back soon!.

If you believe your social security number was breached, it’s also a good idea to notify the three major national credit bureaus – Equifax, Experian, and TransUnion – and ask to have a fraud alertAs a courtesy, you will be leaving Blog.BankFive.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of BankFive.com. Come back soon! placed on your credit report. A fraud alert requires creditors to verify your identity before approving any new credit. You can contact the fraud departments of the three major credit bureaus at:

  • Equifax: 1-800-525-6285
  • TransUnion: 1-800-680-7289
  • Experian: 1-888-397-3742

Monitor your credit report regularly following the loss. Every year you’re entitled to a free credit report from each of the three major credit bureaus, and you can stagger those free reports so you have access to one every four months. You can access your free reports at AnnualCreditReport.comAs a courtesy, you will be leaving Blog.BankFive.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of BankFive.com. Come back soon!.

Check your credit report for any irregularities, including accounts you didn’t open, addresses or aliases you don’t recognize, or hard inquiries you didn’t initiate or permit.

If you’re particularly worried about becoming a victim of identity theft following the loss of your wallet, you may get some peace of mind by placing a security freezeAs a courtesy, you will be leaving Blog.BankFive.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of BankFive.com. Come back soon! on your credit file, or enrolling in a credit monitoring and identity theft protection service like LifeLock. Each of the three major credit bureaus also offer similar monitoring services.

It’s also a good idea to monitor your bank and credit card accounts closely following a breach. If you notice anything suspicious related to your Bank5 Connect accounts, please contact us immediately at 1-855-552-2655.

Ways To Save And Still Enjoy The College Life

It may not be the worst nightmare of a college student, but it ranks right up there – running out of money before the school year ends.


If you’re in college, you probably know what we’re talking about. And right behind that nightmare is the one where you have to text or call your parents begging for cash, and then suffer through the lecture of “not saving enough for school” before they spring you out of financial purgatory.

Fortunately for you, there are some options that can help ease the money crunch, and help you pave the way for a lifetime of smart saving:

  • Select a savings account that suits you best. Things to look for in an account include one that has few or no fees and also has competitive interest rates. Many financial institutions have accounts tailored to college students. Look for them online or ask friends and other students for recommendations. Another option is to select a savings account at an online bank. Many online banks offer higher interest rates than their traditional brick and mortar counterparts, so your savings can pile up faster. Bank5 Connect offers a High-Interest Savings Account that allows you to earn a competitive interest rate with just a $100 minimum balance.
  • Look for a part-time job on or off campus. It can help fill in those financial gaps that you might experience, and give you more money to squirrel away in your savings account.
  • Don’t be an impulsive buyer. Think it through before you make any purchases. You’re going to be an obvious target for retailers in college towns who will try to draw you in with special “student sales.” But unless you really need something, don’t even think about browsing. You want to avoid shelling out money you don’t have for something that really isn’t necessary.
  • Take advantage of student discounts. Restaurants typically offer them, as do student bookstores. A 15% discount here, and a 10% discount there can really add up, so don’t be shy about asking if a retailer offers them.
  • Don’t avoid budgeting. It may sound scary, but a budget will end up becoming your best financial friend. It’s important to know what your income and expenses are on a regular basis so you don’t end up overspending and digging yourself a giant hole of debt.
  • Don’t get sucked in by credit card offers “exclusively” for college students. You might be flattered by the special attention, but avoid falling into that trap. If you can stay away from racking up credit card bills, do so. And if you do decide you need one, be sure you know exactly what you’re getting into, including what happens when the low introductory interest rate goes away. Plus, plan on paying off your entire credit card balance every month so interest charges don’t start to pile up.
  • Live frugally. This could mean cutting out daily trips to the coffee shop or reducing the number of times you’re heading out to bars and restaurants each week. You’ll be surprised (and proud of) just how much you can save by living within your means.

Getting ahead of the class with your saving skills will not only benefit you as a college student, but it will prepare you for your financial future as well. Once you graduate, you’ll likely be on your own with managing your finances, so getting a head start on smart budgeting and saving now can save you some headaches and tough lessons down the road.

Your Child’s Financial Independence Starts With You

Helping your child get their financial footing is a lot like teaching them to ride a bike. When you first start out you’ll need to give them lots of help and guidance.your-child-becoming-financially-independent

The farther they go (the older they get), the more confidence they’ll have and the better they’ll be able to keep their financial balance. The ultimate goal, of course, is to have them become financially independent.

There are lots of ways to get them headed in the right direction. Here are some to consider:

  • Help them understand needs versus wants. The needs include essential things such as food, clothing, and shelter. On the flip side are wants – a new cell phone, a puppy, a new car. Explain that needs should come before wants when dealing with finances.
  • Set the example when it comes to living within your means. Don’t overspend and don’t buy things for the sake of having them. Kids pick up quickly on your habits and will usually mimic what you do.
  • Teach them the importance of creating a budget and sticking to it. This includes explaining income and expenses and striking a balance with the intent of incurring little or no debt. Show that a budget is one of the most important financial tools at their disposal, and that it should be relied on and updated on a weekly or monthly basis.
  • As your child gets older and starts incurring regular expenses – cell phone usage, car insurance, gas – have him contribute toward paying these expenses. It makes them aware of what things cost and gives them a better appreciation of what you’re paying for them. It’s also taking another step toward their financial independence.
  • Don’t’ give your kids everything they want. Whether they’re a toddler or a teenager, you should explain when you think something they’re asking for isn’t within your budget or you don’t think is necessary.
  • Encourage children to get a job in their teen years. From part-time work during the school year to a full-time job during the summer, having them earn an income is an essential part of their road to independence.
  • Teach them the proper way to use a credit card and gain and maintain good credit. This means paying your credit card bill in full every month. Explain to them that if they only pay the minimum due, they will incur interest charges that will continue to pile up until the balance is paid off. In other words, they’ll be living beyond their means and creating debt that could become unmanageable.

On the other hand, if they establish a good credit record, it will pay off when they go to get a loan for such things as a car or college tuition because lenders will be more inclined to provide funds based on a solid credit history.

  • Teach your children the importance of paying their bills on time – another factor that comes into play as far as maintaining a good credit background.
  • Just as important is to show them how you put aside funds in a savings account on a regular basis. Then take it one step further and teach them to start saving at an early age. Many banks and other financial institutions have special accounts designed specifically for youngsters, as well as for kids in their teenage and college age years.