STANDING BY AS the country's largest savings and loan, Washington Mutual teeters on the brink is enough to make a lot of folks nervous -- until they realize that the Federal Deposit Insurance Corp. (FDIC) insures most bank accounts up to $100,000. But what about protecting more than just your savings and checking accounts? Here's how to make sure all your cash is safe - including brokerage accounts and CDs:
Stretch your coverage
Most retirement accounts are covered up to $250,000, but you can increase the coverage on your nonretirement accounts as well. Account holders are safeguarded up to $100,000 at each bank; you can open another account at a different bank when your balance nears $100,000. Want to keep your funds allat one bank? Opening a joint account doubles your protection. Another tactic: Put another $100,000 in a revocable trust, payable to someone else on your death.
Broker a deal
The FDIC doesn't insure brokerage accounts, but the SIPC does the Securities Investor Protection Corp., that is. The SIPC protects at least $500,000 per account, including $100,000 in cash, if a brokerage fails. But brokerage firms often don't actually keep your cash; instead, they spread those funds across a participating network of insured bank accounts. This way, points out Don Montanaro, CEO of TradeKing, investors get FDIC protection plus the convenience of a singlefirm and a single statement. But shop around forinterest rates: TradeKing offers just 0.9 percent even on $1 million in cash.
Tap a bank network
More than 2,000 banks are part of the Certificate of Deposit Account Registry Service, which offers CDs insured for up to $50 million. Funds get divvied into $100,000 accounts and distributed across FDIC-insured banks, most of which are smaller and regionally based use CDARS.com to find one near you. Most banks will also negotiate higher rates for customers with large sums of cash, says Barry Korb, a Maryland-based financial planner.
For more SmartMoney Magazine features, turn to the September issue.