You work hard for your money and want it to be safe. Fortunately, the accounts in your financial institution are FDIC insured. So, what is FDIC insurance, and how does it work?
The Federal Deposit Insurance Company (FDIC) was founded in 1933 following the stock market crash in 1929 to protect deposit holders against potential bank failures by providing deposit insurance. The initial limit was set at $2,500 per ownership category, which has since increased several times. The latest increase to $250,000 per ownership category was enacted via the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.
According to the FDIC, here are the types of accounts that are covered:
- Checking accounts
- Negotiable Order of Withdrawal (NOW) accounts
- Savings accounts
- Money market deposit accounts (MMDA)
- Time deposits such as certificates of deposit (CDs)
- Cashier's checks, money orders, and other official items issued by a bank
And here are the types of accounts not covered by the FDIC:
- Stock investments
- Bond investments
- Mutual funds
- Crypto Assets
- Life insurance policies
- Municipal securities
- Safe deposit boxes or their contents
- U.S. Treasury bills, bonds, or notes*
*These investments are backed by the full faith and credit of the U.S. government.
Deposits held by a person in multiple FDIC-insured banks are insured up to $250,000 per institution. A depositor may also have accounts in the same bank insured for up to $250,000 per ownership type. The different FDIC ownership account categories are:
If you need help determining how the insurance rules and limits apply to your deposits in a specific bank, the FDIC has an Electronic Deposit Insurance Estimator (EDIE). EDIE calculates the insurance coverage for your accounts and ensures you don’t exceed your coverage limits. You can access EDIE here.
Some financial institutions do not insure their deposits with the FDIC or the NCUA (National Credit Union Administration, the insurance entity for credit unions). Depositors should be wary of these institutions, look for the FDIC or NCUA insurance logo, or ask to ensure their account is insured before depositing.
NASB is an FDIC-insured bank; all deposit accounts are covered up to $250,000. If you want to learn more about how the FDIC insures accounts, visit one of the bankers at our NASB branches or click here.