Orlando Harmon
When it comes to money, it's important to know where your funds are safe and insured. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per institution, and ownership category at member banks. However, there are instances where your money may not be insured, such as when dealing with non-bank companies or investment products. It's crucial to be vigilant against scams and understand the limitations of deposit insurance to ensure your funds are protected. Additionally, accounts at credit unions are insured by the National Credit Union Association (NCUA), and the Securities Investor Protection Corporation (SIPC) protects customers of SIPC-member broker-dealers if the firm fails financially. Understanding these nuances ensures you can make informed decisions about where to keep your money.
| Characteristics | Values |
|---|---|
| Money not insured by the Federal Deposit Insurance Corporation (FDIC) | Investment and insurance products |
| Non-bank companies (e.g. apps) that do not have a relationship with a bank | |
| If a non-bank company fails or files for bankruptcy | |
| Scams and fake websites | |
| Credit unions (insured by the National Credit Union Association (NCUA)) | |
| Money not insured by the Securities Investor Protection Corporation (SIPC) | Not a member of the 3,200+ brokerage firms that are SIPC members |
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What You'll Learn
Investment and insurance products
It is important to understand that investment and insurance products are also not insured by any federal government agency. They are not a deposit or obligation of, or guaranteed by, the bank or any of its affiliates. These products are subject to investment risks, including the possible loss of the principal amount invested.
The Securities Investor Protection Corporation (SIPC) is another entity that provides protection for certain investment accounts. SIPC is a nonprofit membership corporation created by federal statute in 1970. It protects customers of SIPC-member broker-dealers if the firm fails financially. SIPC insurance covers investors for up to $500,000 in securities, with up to $250,000 in cash balances. However, SIPC does not protect investors from market losses or the decline in value of their investments.
To protect your money, it is important to understand the risks involved and deal only with trusted and legitimate financial institutions. Be cautious of scams and fraudulent websites or apps that may mimic legitimate banking platforms. Always ensure that your financial institution is FDIC-insured or a member of SIPC before investing your money.
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Non-bank financial service providers
While NBFIs can play an important role in strengthening an economy, offering alternatives for savings and capital investment, they are not subject to the same regulations as traditional banks. This lack of regulation can, in some cases, make the financial system more fragile and put the stability of the entire system at risk. For example, in the lead-up to the 2007-2008 financial crisis, regulators focused their supervision on pension funds and insurance companies while largely overlooking hedge funds and structured investment vehicles.
When it comes to insuring your money, it's important to understand the limitations of NBFIs. Unlike traditional banks, which may be insured by the Federal Deposit Insurance Corp. (FDIC) or the Securities Investor Protection Corporation (SIPC), NBFIs may not offer the same level of protection. For example, FDIC insurance does not apply if a non-bank company fails or files for bankruptcy, although you may be able to recover your funds through bankruptcy proceedings.
To ensure your money is protected, it's crucial to carefully read the disclosures and understand the eligibility requirements for FDIC insurance when dealing with NBFIs. Additionally, be cautious of scams and fraudulent websites that may impersonate legitimate financial institutions. Always verify the authenticity of the company and understand who you are dealing with before turning over your money.
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Credit unions
When it comes to insurance, credit unions may be federally or state-chartered. Federally chartered credit unions are regulated and insured by the National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF provides share insurance coverage, similar to that provided by the Federal Deposit Insurance Corporation (FDIC) for banks. This insurance protects members' accounts up to $250,000 per owner, including individual, joint, and retirement accounts. It covers deposits in share draft accounts, share savings accounts, and time deposits. However, it's important to note that the NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these products are offered by a federally insured credit union.
On the other hand, state-chartered credit unions may or may not be insured by the NCUA. Some state-chartered credit unions are insured by private insurers, providing non-federal share insurance coverage that is not backed by the full faith and credit of the US government. It is important for members to understand the insurance coverage provided by their specific credit union and whether it is federally or privately insured.
To ensure members' confidence, federally insured credit unions are required to display the official NCUA insurance sign at teller stations, where deposits are received, and on their websites if they accept deposits or open accounts online. Additionally, members can use resources like the "Find a Credit Union" function on MyCreditUnion.gov to determine if their credit union is federally insured.
In summary, while credit unions may offer insurance coverage for members' accounts, it is important to understand the specific insurance policies and any limitations or exclusions that may apply. Members should carefully review the insurance coverage provided by their credit union to ensure their funds are adequately protected.
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Apps and websites with suspicious permissions
Apps and websites often require access to certain functions and data on your device to perform their intended tasks. However, some apps may request permissions that are not necessary for their stated purpose, which can be a cause for concern. Here are some common types of suspicious permissions that apps and websites may request:
- Camera access: While it is common for photography, beauty, or communication apps to request camera access, it is suspicious when apps unrelated to these functions request the same, such as a calculator app. Granting camera access can allow hackers to secretly record or take pictures of you and your surroundings without your knowledge.
- Location access: Apps often request location access to provide location-based services or ads. However, malicious apps can use this permission to load location-based attacks or malware. They can also continue to track your location even when you believe you've stopped them from doing so.
- Storage access: Permissions like "READ_EXTERNAL_STORAGE" and "WRITE_EXTERNAL_STORAGE" allow apps to access, modify, and delete files on your device storage or connected storage devices. Malicious apps can use this access to steal and delete your photos, documents, and other personal files.
- Network access: Apps may request permission to check for and connect to cellular networks and Wi-Fi. While this is necessary for downloading updates or connecting to servers, malicious apps can use network access to download additional malware or send unauthorized text messages.
- Microphone access: Similar to camera access, microphone access can be abused by hackers to secretly record your conversations or surroundings.
- Notification access: Some apps request permission to access your notifications, often under the guise of providing runtime notifications. However, this permission can be abused by malware to intercept and modify notifications, or even reply to them without your knowledge.
- High-privilege permissions: Apps that require high-privilege permissions or admin consent are more likely to be risky. For example, a clock app with full access to all mailboxes raises suspicion.
It's important to carefully review the permissions an app is requesting before granting them. Be cautious of apps that request permissions beyond what is necessary for their stated purpose. Additionally, be wary of apps with suspicious names, publishers, or websites, as well as those that haven't been updated recently, as they may be abandoned or unsupported.
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Accounts with over $250,000
If you have over $250,000 in a single account, only a portion of your money is protected. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) insure deposits at banks and credit unions, respectively, up to $250,000 per depositor, per insured institution, and per ownership category. This means that if you have accounts in different ownership categories (such as individual, joint, and retirement accounts), each category is insured up to $250,000 in case the institution fails.
To protect your money, you can open an account at a second FDIC member bank. You can also open accounts in additional ownership categories, such as joint accounts, to increase your insurance coverage. Another option is to use the IntraFi Network, which allows you to get FDIC insurance on millions of dollars through a network of financial institutions without opening accounts at multiple banks. The IntraFi Network includes programs such as the Certificate of Deposit Account Registry Service (CDARS) or Insured Cash Sweep (ICS) to spread money across multiple banks.
If you have a trust account, you can name beneficiaries to increase your coverage limit. As of April 1, 2024, the maximum insurance coverage for a trust owner with five or more beneficiaries is $1,250,000 per owner for all trust accounts held at the same bank. Each beneficiary can add another $250,000 in coverage. However, beneficiaries always get priority over a will, so consider how this will fit into your estate plan.
Additionally, some financial institutions may work with other institutions to guarantee higher deposit levels. For example, Citizens Bank of Edmond offers additional coverage of up to $150 million per depositor through the IntraFi Network. For Massachusetts residents or those banking with Massachusetts-based institutions, the Depositors Insurance Fund (DIF) offers unlimited insurance above FDIC limits.
It is important to note that FDIC insurance does not cover investment products like stocks, bonds, mutual funds, cryptocurrencies, life insurance policies, annuities, or municipal securities.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per institution, and per ownership category at member banks. You can check if your bank is a member of the FDIC by using their online tool or calling them.
You can open an account at a second FDIC member bank to get another $250,000 insured. Alternatively, you can look into the IntraFi Network Deposits program, which allows you to get FDIC insurance on millions of dollars through a network of financial institutions without having to open multiple accounts.
Accounts at credit unions are insured by the National Credit Union Association (NCUA). You can also look into the Depositors Insurance Fund (DIF), a private insurance fund that insures deposit amounts at member banks beyond what the FDIC covers.
Be cautious of scams and fraudulent websites or apps that impersonate banks. Always check that you are dealing with an FDIC-insured bank and be wary of suspicious permissions or poor grammar/misspellings. Understand who you are dealing with before turning over your money or sharing personal information.
