Paul Sanchez
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that insures deposits at most banks. The FDIC insures balances of up to $250,000 held in various types of consumer and business deposit accounts, including savings accounts. FDIC insurance is automatic for any deposit account opened at an FDIC-insured bank, and it covers the principal and interest of an account. This means that if a bank fails, the FDIC will reimburse customers for any losses incurred, up to the insured amount.
| Characteristics | Values |
|---|---|
| Agency | Federal Deposit Insurance Corporation (FDIC) |
| Agency Type | Independent federal agency |
| Insured Amount | Up to $250,000 per depositor, per FDIC-insured bank, per ownership category |
| Insured Accounts | Checking accounts, savings accounts, money market deposit accounts, certificates of deposit (CDs), negotiable orders of withdrawal (NOW) |
| Insurer | The Federal Government of the United States of America |
| Insurer's Role | The FDIC pays insurance to depositors up to the insured limit in the event of a bank failure |
| Insurer's Action | The FDIC either transfers funds to another insured bank or issues a check |
| Insured Banks | Most banks, including online-only banks, offer deposit customers FDIC insurance |
| Insured Account Type | Deposit accounts |
| Non-Insured Accounts | Share accounts at credit unions, stocks, bonds, money market funds, cryptocurrency, safe deposit boxes, annuities, insurance products, regular shares, share draft accounts of credit unions |
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What You'll Learn
The Federal Deposit Insurance Corporation (FDIC)
The FDIC insures balances up to $250,000 held in various types of consumer and business deposit accounts. The amount of FDIC insurance coverage you may have depends on your account’s FDIC ownership category, such as single accounts, joint accounts, and trust accounts. FDIC insurance is backed by the full faith and credit of the government of the United States, and according to the FDIC, "since its start in 1933, no depositor has ever lost a penny of FDIC-insured funds". The FDIC also has the authority to regulate and supervise state non-member banks.
FDIC-insured institutions are permitted to display a sign stating the terms of its insurance, including the per-depositor limit and the guarantee of the United States government. This sign is meant to be a symbol of confidence for depositors. The FDIC has created useful resources to help bankers provide depositors with accurate information on deposit insurance. The FDIC website provides extensive resources for bankers, including guidance on regulations, information on examinations, legislation insights, and training programs.
It is important to note that the FDIC does not insure all types of accounts. Uninsured products include financial instruments such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products. The FDIC also does not insure share accounts at credit unions, which are instead insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
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FDIC insurance coverage
The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures deposits in banks and savings associations (insured banks) across the country. FDIC insurance coverage protects your money in the event of a bank failure. FDIC deposit insurance covers all types of deposits held at an insured bank, including checking accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market deposit accounts (MMDA), certificates of deposit (CD), and other time deposit accounts. Coverage is automatic when you open one of these types of accounts at an FDIC-insured bank. Your deposits are automatically insured up to $250,000 per depositor, per insured bank, and per ownership type. This limit applies to all types of accounts combined, including single accounts, joint accounts, trust accounts, corporate accounts, and other categories. FDIC insurance covers the principal and interest of an account, not exceeding the $250,000 limit. For example, if you have a savings account with a balance of $50,000 and a CD with $150,000, both accounts are insured as they fall under the $250,000 limit. It's important to note that FDIC insurance does not cover all types of accounts and financial products. Financial instruments such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products are not insured by the FDIC. Additionally, the FDIC does not insure accounts at credit unions; these are insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
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FDIC-insured banks
The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures bank deposits up to $250,000 per depositor, per insured bank, and per ownership type. FDIC insurance covers deposits in checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs). FDIC-insured banks are typically clearly identified as such, and this information is often included in marketing materials.
The FDIC was created by the federal government during the Depression in 1933 to protect customers against losses if their bank fails. FDIC insurance is automatic when you open a deposit account at an FDIC-insured bank, and it covers the principal and interest of an account, not exceeding the $250,000 limit. This limit applies per person, per bank, and per account category. For example, a single account holder with a savings account and a checking account at the same bank would have a total coverage of $250,000 for both accounts. However, a joint account with two account holders would be insured up to $250,000 per co-owner, resulting in a total coverage of $500,000.
It is important to note that the FDIC does not insure all types of accounts. Financial instruments such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products are not covered by FDIC insurance. Additionally, the FDIC does not insure share accounts at credit unions; these are insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
To check if a bank is FDIC-insured, you can use the FDIC's BankFind Suite tool on their website or call them directly. You can also contact your bank to inquire about its FDIC status.
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Deposit insurance
History
The concept of deposit insurance emerged as a response to the Great Depression of the 1930s, when bank failures led to widespread panic and economic turmoil. The United States was the second country, after Czechoslovakia, to establish a national deposit insurance scheme in 1933. Since then, many other nations have followed suit, recognising the importance of safeguarding depositors' funds and preventing systemic risks to the financial sector.
It's important to note that not all types of accounts are insured by the FDIC. For example, financial instruments like stocks, bonds, and cryptocurrencies are not covered. Additionally, credit unions in the US are typically insured by the National Credit Union Administration (NCUA), rather than the FDIC.
Global Variations
As of 2024, South Africa introduced the Corporation for Deposit Insurance (CODI), insuring up to R100,000 per depositor, while Brazil's "Credit Guarantee Fund" (FGC) protects depositors with a limit of R$250,000 per depositor.
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NCUA insurance
The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures deposits in banks. However, it does not insure accounts in credit unions. Instead, credit union accounts are insured by the National Credit Union Administration (NCUA).
The NCUA is an independent federal agency that insures credit union members' deposits up to $250,000 per ownership category. This includes deposits in share savings accounts, share draft accounts (also known as checking accounts), and share certificates. The NCUA's insurance coverage is automatic for members of federally insured credit unions, and no separate application is required. The NCUA also provides a Share Insurance Estimator, which allows members to calculate the insurance coverage for their specific account type.
It is important to note that the NCUA does not insure all types of accounts or financial products. For example, the NCUA does not cover stocks, bonds, mutual funds, life insurance policies, annuities, municipal securities, safe deposit boxes, or digital assets such as cryptocurrencies. These products are often offered by credit unions through third-party providers, but they are not insured by the NCUA's Share Insurance Fund.
To ensure that a credit union is federally insured, members can look for the official NCUA insurance sign, which must be displayed at each teller station, on the credit union's website, and wherever share deposits are accepted or accounts are opened. Additionally, members can use the NCUA's Credit Union Locator tool to verify federal insurance coverage.
In summary, the NCUA provides insurance for credit union members' deposits, offering protection of up to $250,000 per ownership category. This insurance coverage is automatic, and the NCUA provides tools like the Share Insurance Estimator to help members understand their coverage. However, it is essential to remember that not all account types or financial products are insured by the NCUA.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that insures deposits at most banks. The FDIC insures up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
Banks will usually advertise this protection for their customers, or you can ask a banker when considering opening a new account. You can also check the FDIC Bank Find Suite page or call 1-877-ASK-FDIC (1-877-275-3342).
In the unlikely event of a bank failure, the FDIC responds in two ways. First, as the insurer of the bank's deposits, the FDIC pays insurance to depositors up to the insurance limit. Second, as the receiver of the failed bank, the FDIC assumes the task of selling/collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit.
The FDIC does not insure financial instruments such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products. The FDIC also does not insure regular shares and share draft accounts of credit unions.
