Understanding What FDIC Insurance Covers for Your Money

FDIC insurance is a crucial protection for your bank deposits. It covers deposits up to $250,000 per depositor, per insured bank.

This means that if you have multiple accounts in the same bank, such as a checking and savings account, they are combined for insurance purposes. You can have up to $250,000 in these accounts and still be fully insured.

If you have joint accounts, the insurance coverage applies to each owner's portion of the account. For example, if you have a joint checking account with your spouse, the coverage would be $250,000 for each of you.

The FDIC insures deposits at banks and certain other types of financial institutions, but it does not cover investments or other types of financial products.

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FDIC insurance covers a wide range of deposit accounts, including checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs).

The FDIC insures individual retirement accounts (IRAs), but only the parts that fit the type of accounts listed previously. Joint accounts, revocable and irrevocable trust accounts, and employee benefit plans are also covered.

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FDIC insurance doesn't cover products such as mutual funds, annuities, life insurance policies, stocks, or bonds. The contents of safe-deposit boxes are also not included in FDIC coverage.

Cashier's checks and money orders issued by the failed bank remain fully covered by the FDIC. Eligible business accounts from a corporation, partnership, LLC, or unincorporated organization at a bank are also FDIC-covered.

Here are some examples of accounts that are covered by FDIC insurance:

For example, if you have $260,000 in a certificate of deposit (CD) and $50,000 in a savings account, you would be insured for $250,000 and have $60,000 uninsured.

Bank insolvency can be a scary thing, but the FDIC has got your back. If a bank fails, the FDIC acts quickly to ensure depositors get their money back.

The FDIC acts in two capacities: as the "Insurer" of the bank's deposits, paying deposit insurance to depositors up to the insurance limit, and as the "Receiver" of the failed bank, collecting and selling its assets and settling its debts.

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If you're wondering what happens to your money in a bank failure, the FDIC deposit insurance covers the balance of each depositor's account, dollar-for-dollar, up to the insurance limit.

Here are the FDIC deposit insurance coverage limits by account ownership category:

This means that no matter what type of account you have, you're protected up to $250,000.

FDIC deposit insurance enables consumers to confidently place their money at thousands of FDIC insured banks across the country, and is backed by the full faith and credit of the United States government.

The FDIC covers a wide range of deposit products, including checking accounts, savings accounts, money market deposit accounts, time deposits such as certificates of deposit (CDs), and more. Coverage extends to individual retirement accounts (IRAs), but only the parts that fit the type of accounts listed previously.

Here's a breakdown of what's covered:

The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

FDIC deposit insurance enables consumers to confidently place their money at thousands of FDIC-insured banks across the country.

The FDIC covers a wide range of deposit products, including checking accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market deposit accounts, time deposits like certificates of deposit (CDs), and cashier's checks, money orders, and other official items issued by a bank.

Depositors do not need to apply for FDIC insurance, coverage is automatic whenever a deposit account is opened at an FDIC-insured bank or financial institution.

The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

Here's a breakdown of the FDIC coverage limits by type of account owner category:

However, a few accounts, such as the Wealthfront Cash Account, can provide even higher FDIC insurance limits by spreading or sweeping your funds across multiple banks.

The FDIC sets out a list of ownership categories that are fully covered, including individual accounts, joint accounts, certain retirement accounts, trust accounts, employee benefit plan accounts, business accounts, and government accounts.

Filing a claim with the FDIC is a relatively straightforward process. You can submit your request online through the FDIC website.

The FDIC's customer service hotline is available to provide personalized assistance at no cost - just call 877-275-3342 (1-877-ASKFDIC).

You can file a claim as early as the day after a bank or thrift folds, so don't delay.

The FDIC only insures against bank failures, not instances of fraud, theft, or similar loss. These types of losses are handled directly by the banking institution.

The FDIC has a long history of protecting depositors' funds, dating back to 1933 when it was created during the Great Depression. This was a time of great financial uncertainty, and the FDIC's mission was to restore confidence in the banking system.

In the early days, the FDIC insured deposits up to $2,500, which was a significant amount at the time. Today, the standard insurance coverage is $250,000 per depositor, per insured bank. This means that if you have multiple accounts at the same bank, they're all combined under the $250,000 limit.

The FDIC's insurance coverage has been increased over the years to keep pace with inflation and changing banking practices. This ensures that depositors continue to have peace of mind, knowing their funds are protected.

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The establishment of the FDIC in 1933 was a pivotal moment in banking history. President Franklin D. Roosevelt was initially hesitant to insure bank deposits, but public support was overwhelmingly in favor.

Roosevelt signed the 1933 Banking Act into law on June 16, 1933, creating the FDIC as a temporary government corporation. The initial plan was to insure deposits up to $2,500, but this was later increased to $5,000.

The 1933 Banking Act gave the FDIC authority to provide deposit insurance to banks, regulate and supervise state non-member banks, and fund itself with loans in the form of stock contributions from the Treasury and the Federal Reserve Banks. This act also extended federal oversight to all commercial banks for the first time.

Here are some key provisions of the 1933 Banking Act:

The per-depositor insurance limit has increased over time to accommodate inflation. One notable example is the temporary increase from $100,000 to $250,000, which was effective from October 3, 2008, through December 31, 2010.

The temporary increase was extended through December 31, 2013, and the $250,000 insurance limit was made permanent by the Dodd–Frank Wall Street Reform and Consumer Protection Act. This law also extended the guarantee retroactively to January 1, 2008.

The FDIC-insured institutions are permitted to display a sign stating the terms of its insurance. This sign is a symbol of confidence for depositors, as it clearly communicates the per-depositor limit and the guarantee of the United States government.

Here is a list of historical per-depositor insurance limits:

The 1980s banking crisis was a major test for the US financial system. The Federal Savings and Loan Insurance Corporation (FSLIC) was created to insure deposits held by savings and loan institutions, but it was insufficient to pay off the depositors of all failing thrifts.

The crisis was caused by a confluence of events that left much of the S&L industry insolvent. The FSLIC's reserves were depleted, and it was abolished in August 1989.

The Resolution Trust Corporation (RTC) was established to take over FSLIC's responsibilities, and it was later merged into the FDIC in 1995. The FDIC became responsible for resolving failed thrifts.

The total losses from the crisis were estimated at $152.9 billion, with U.S. taxpayer losses amounting to approximately $123.8 billion. This accounted for 81% of the total costs.

The FDIC's Bank Insurance Fund was exhausted in 1990, but it was able to borrow $15 billion from the Federal Financing Bank to strengthen the fund. The debt was repaid by 1993.

The 2007-2008 financial crisis was a challenging time for the FDIC, with a total of 528 member institutions failing between 2008 and 2017.

The FDIC faced its greatest challenge during this period, with the annual number of failures peaking at 157 in 2010. The largest failure to date was Washington Mutual, while IndyMac was the sixth largest.

At the height of the crisis, Treasury secretary Henry Paulson and Federal Reserve officials proposed that the FDIC should guarantee debts across the US financial sector, but Chairman Sheila Bair resisted. Instead, the FDIC announced a Temporary Liquidity Guarantee Program that guaranteed deposits and unsecured debt instruments used for day-to-day payments.

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To promote depositor confidence, Congress temporarily raised the insurance limit to $250,000. The largest FDIC payout for 2009 was $5.6 billion for the failure of Florida-based BankUnited FSB.

The FDIC's insurance fund was exhausted by late 2009, but rather than borrowing from the FFB or the Treasury, the FDIC demanded three years of advance premiums from its member institutions. The fund operated with a negative net balance.

The Dodd-Frank Act of 2010 created new authorities for the FDIC to address risks associated with systemically important financial institutions. A new division, the Office of Complex Financial Institutions, was created to administer these responsibilities.

The act made the insurance limit increase permanent and required the FDIC to submit a restoration plan whenever the insurance fund balance falls below 1.35% of insured deposits. The insurance fund returned to a positive balance at the start of 2011 and reached its required balance in 2018.