Question

Tamar has $1 million to deposit in his FDIC-insured bank. The best way to do that is _____.

Option 1: It does not matter.
Option 2: $500,000 in two accounts.
Option 3: $1,000,000 in one account.
Option 4: $250,000 in four accounts.

Answer 1

To fully protect a $1 million deposit with FDIC insurance, Tamar should deposit $250,000 in four separate accounts since the FDIC insures up to $250,000 per account.

Step-by-step explanation:

If Tamar has $1 million to deposit in his FDIC-insured bank, the best way to do that to ensure full FDIC protection would be Option 4: $250,000 in four accounts. The FDIC guarantees that depositors will receive up to $250,000 of their money in each account if the bank should go bankrupt. By spreading the $1 million across four separate accounts, Tamar ensures that the entire amount is protected.

Since the FDIC insures up to $250,000 per depositor, per insured bank, for each account ownership category, having multiple accounts at the same insured bank, in different ownership categories, is also a way to increase the total amount of insurance coverage available.