Private Banks: Insured Or Not?

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that protects customers against loss of deposit if their bank fails, up to $250,000 per depositor, per institution, and per ownership category. The FDIC was created during the Great Depression in 1933 to maintain stability and public confidence in the US financial system. While most banks are insured by the FDIC, not all banking institutions or types of financial accounts are covered. For example, the FDIC does not insure share accounts at credit unions, which are instead insured by the National Credit Union Administration (NCUA).

The Federal Deposit Insurance Corporation (FDIC) insures deposits at most banks

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that insures deposits at most banks. The FDIC was founded in 1933 to protect bank depositors against the loss of their insured deposits in the event of an FDIC-insured bank or savings association failure. FDIC insurance is backed by the full faith and credit of the United States government, and since its inception, no depositor has lost any FDIC-insured funds.

FDIC insurance covers deposit accounts at FDIC-insured banks, including:

• Checking accounts
• Savings accounts
• Money market deposit accounts (MMDAs)
• Certificates of deposit (CDs)
• Negotiable order of withdrawal (NOW) accounts

The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category. This means that if you have multiple accounts in different ownership categories, you may qualify for more than $250,000 in FDIC coverage. Ownership categories include:

• Single accounts
• Joint accounts
• Certain retirement accounts
• Trust accounts
• Employee benefit plan accounts
• Corporation/partnership/unincorporated association accounts
• Government accounts

To determine if a bank is FDIC-insured, you can ask a bank representative, look for the FDIC sign at your bank, or use the FDIC's BankFind tool on its website.

The FDIC insures up to $250,000 per depositor, per institution and ownership category

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that protects and reimburses your deposits up to the legal limit of $250,000 if your FDIC-insured bank fails. This limit applies per depositor, per institution and ownership category.

The FDIC covers many common deposit accounts but doesn't insure investment accounts. The following types of accounts are covered:

• Savings accounts (including high-yield savings accounts)
• Negotiable order of withdrawal (NOW) accounts
• Money market deposit accounts (MMDAs)
• Time deposits such as certificates of deposit (CDs)
• Cashier's checks, money orders and other official items issued by a bank

The FDIC does not cover the following:

• Life insurance policies
• Municipal securities
• Safe deposit boxes or their contents
• U.S. Treasury bills, bonds or notes (although these investments are backed by the full faith and credit of the US government)

FDIC insurance is automatic when you open a deposit account at an FDIC-insured bank. You can confirm that your bank is insured by searching for it in the BankFind tool available on the FDIC website or by calling the FDIC.

The FDIC provides separate insurance coverage for funds depositors may have in different categories of legal ownership, or "ownership categories". This means that a bank customer who has multiple accounts may qualify for more than $250,000 in insurance coverage if the customer's funds are deposited in different ownership categories and the requirements for each ownership category are met.

Ownership categories include:

• Single accounts (owned by one person, no beneficiaries)
• Joint accounts (owned by more than one person, no beneficiaries)
• Certain retirement accounts, including IRAs
• Revocable trust accounts
• Irrevocable trust accounts
• Corporation, partnership and unincorporated association accounts
• Employee benefit plan accounts
• Government accounts

FDIC insurance covers money market accounts and certificates of deposit

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that protects bank customers against the loss of their insured deposits in the event of an FDIC-insured bank failure. FDIC insurance covers money market accounts and certificates of deposit (CDs).

FDIC insurance covers the principal and interest of an account, not exceeding the $250,000 limit per depositor, per FDIC-insured bank, and per ownership category. This means that money market deposit accounts (MMDAs) and CDs are insured up to $250,000. For example, if a customer had a CD account with a principal balance of $195,000 and $3,000 in accrued interest, the full $198,000 would be insured.

FDIC insurance is automatic for any deposit account opened at an FDIC-insured bank, and most banking institutions are insured by the FDIC. To check if your bank is FDIC-insured, you can ask a bank representative, look for the FDIC sign at your bank, or use the FDIC's BankFind tool.

It is important to note that FDIC insurance does not cover all types of accounts. While it covers MMDAs and CDs, it does not cover financial instruments such as stocks, bonds, money market funds, cryptocurrency, US Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products.

FDIC insurance doesn't cover stocks, bonds, or mutual fund investments

The Federal Deposit Insurance Corporation (FDIC) is an independent government agency that was formed in 1933 in response to the widespread failure of America's banks in the 1920s and 1930s, which contributed to the Great Depression. The FDIC provides insurance for the vast majority of bank accounts, protecting customers against the loss of deposits if their bank fails.

However, it's important to note that FDIC insurance does not cover all types of accounts and financial products. While it covers checking accounts, savings accounts, money market deposit accounts, and certificates of deposit, it does not cover stocks, bonds, or mutual fund investments. These investment vehicles are not insured by the FDIC because they are not considered deposits and carry a certain level of risk.

Stocks, bonds, and mutual funds are subject to market fluctuations, and investors understand that there is a chance of losing their original investment. As such, these investments do not fall under the protection of the FDIC, which aims to protect individuals from losing their money due to bank failure, not investment risk.

Additionally, the FDIC insurance limit per depositor, per institution, and per ownership category is $250,000. This means that even if your stocks, bonds, or mutual funds are held in an FDIC-insured bank, they are not covered by the insurance if their value exceeds $250,000.

In summary, investors should be aware that FDIC insurance does not cover stocks, bonds, or mutual fund investments. These types of investments carry their own risks, and investors should carefully consider these risks before purchasing such products.

The National Credit Union Administration insures credit union accounts

The Federal Deposit Insurance Corporation (FDIC) insures deposits at most banks in the US. However, the FDIC does not insure credit union accounts. Instead, the National Credit Union Administration (NCUA) insures credit union accounts.

The NCUA is an independent government agency that was established by Congress in 1970 to insure member share accounts at federally insured credit unions. The NCUA administers the National Credit Union Share Insurance Fund (NCUSIF), which is a federal insurance fund backed by the full faith and credit of the US government.

The NCUSIF provides up to $250,000 in coverage for each single ownership account. This means that if an individual has $150,000 in a savings account and $100,000 in a money market account at the same credit union, their total deposits of $250,000 are fully insured by the NCUA.

For jointly owned accounts, the NCUSIF provides an additional $250,000 in coverage for each account holder. This means that a joint savings account held by a married couple, for example, would be insured for a total of $500,000, consisting of $250,000 for each account holder.

It is important to note that single ownership accounts with beneficiaries do not qualify for joint account insurance. However, the NCUA does offer separate insurance for trust accounts, which are accounts managed by a designated person or firm on behalf of one or more beneficiaries. Each beneficiary named on such accounts may qualify for an additional $250,000 in insurance coverage.

Credit unions are required by law to display the official NCUA insurance sign at each teller station and where insured account deposits are normally received. They must also display this sign on their website if they accept deposits or open accounts online. Additionally, all federal credit unions must be insured by the NCUA, and credit unions must notify their members before terminating their federal insurance.

Frequently asked questions