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There's No Safer Place to Have Your Money than in a Bank
Deposit Insurance through the FDIC
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government created by Congress in 1933 to protect bank depositors against the loss of their deposits. The insurance fund was created and is sustained through the payment of premiums by FDIC insured banks. Furthermore, FDIC insurance is backed by the full faith and credit of the United States government. To check whether your bank or savings association is insured by the FDIC, look for the FDIC official teller sign, shown below, where deposits are received, or use “Bank Find” at www.fdic.gov/deposit/index.html.
Insurance Coverage Amounts
The FDIC insures deposit accounts such as checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs). The basic insurance limit is $250,000 per depositor per insured bank. If you or your family has $250,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage. Your funds are fully insured.
If you or your family has deposits at one insured bank totaling more than $250,000, you should know that different ownership categories of accounts are separately insured. You may qualify for more than $250,000 in coverage at one insured bank if you own deposit accounts in different ownership categories. In addition, federal law provides up to $250,000 in deposit insurance coverage for self-directed retirement accounts, such as Individual Retirement Accounts (IRAs).
The most common ownership categories are:
- Single Accounts (deposits owned by one person);
- Self-Directed Retirement Accounts;
- Joint Accounts; and
- Revocable Trust Accounts (e.g. - certain Payable on Death (POD) accounts)
Because the different ownership categories of accounts are separately insured, a family could have well over $1 million in deposit insurance at the same bank. Here’s a link to a page taken from an FDIC guide to deposit insurance. It shows how a family with two parents and three children reached $1.5 million in deposit insurance coverage. The amount of coverage in the example could have been even higher if the family members had also made use of the ownership category for single accounts. Click here for a copy of the full brochure on FDIC Insured Deposits.
When Does the FDIC Pay Insured Deposits?
Federal law requires the FDIC to pay insured deposits "as soon as possible" after an insured bank closes. Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor. Federal law requires the FDIC to pay 100 percent of the insured deposits up to the federal limit — including principal and interest. Throughout the FDIC’s history, no bank depositor has ever lost a penny of insured deposits.
Additional Resources
For more information about deposit insurance, speak with your bank. You can also contact the FDIC’s call center to get answers to your questions about deposit insurance coverage. The phone number is 1-877-ASK-FDIC (1-877-275-3342). The call center operates 8 a.m. to 8 p.m. Eastern time – Monday through Friday.
In addition, the FDIC has placed a variety of resources on its Website, including videos and guides on deposit insurance. The link is http://www.fdic.gov/deposit/deposits/index.html.
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