Transaction Account Guarantee Program

Transaction Account Guarantee (TAG) Program FAQs

First National Bank of LaGrange is participating in the FDIC's Transaction Account Guarantee Program. Under that program, through December 31, 2010, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.

What is the Transaction Account Guarantee (TAG) Program? On October 14, 2008, the FDIC announced its new Transaction Account Guarantee (TAG) Program as part of the Temporary Liquidity Guarantee Program. The TAG program guarantees full deposit insurance coverage of non-interest bearing deposit transaction accounts, regardless of the dollar amount. All FDIC-insured institutions were automatically enrolled for a 30-day period. We are pleased to announce that we will continue our participation in this program.

How long will the additional FDIC coverage last? The TAG program guarantees full deposit coverage of non interest-bearing transaction accounts, regardless of the dollar amount and is in addition to the standard FDIC insurance that has been increased to $250,000 per depositor. The TAG Program limit was originally in effect through December 31, 2009, but has been extended through December 31, 2010.

How does the Transaction Account Guarantee Program affect my insurance coverage on other types of accounts? The FDIC coverage on non-interest bearing deposit transaction (checking) accounts is over and above the current FDIC coverage of $250,000 per depositor.

Example: If you have $50,000 in a non-interest bearing deposit transaction (checking) account and $250,000 in a certificate of deposit (CD), the FDIC will insure the entire $300,000.

What are non-interest bearing deposit transaction accounts? Non-interest bearing deposit transaction accounts are any demand deposit accounts, such as personal or business checking accounts, that do not earn interest. There are a couple of exceptions to the "interest bearing/noninterest bearing" rule:

• NOW Accounts (Interest Checking Accounts) that maintain an interest rate of no greater than 0.25% (originally 0.50%) will also be an exception to the rule and will be completely covered by FDIC insurance.
• Premium NOW Accounts contain a tiered rate that exceeds 0.25% (originally 0.50%), so they are not covered under this additional guarantee.
• Money Market Accounts since they have are a limited transactional account, fall under the category of Savings Accounts. These accounts will be insured like all other Savings accounts.
• IOLTA Accounts (Interest on Lawyers Trust Accounts). These are accounts that ARE interest bearing that are maintained by Lawyers for their clients, but the interest is not given to the attorneys, but to the State Bar Association. This money is then used to provide legal services for low income individuals. In this sense, the account is considered a non-interest bearing account.