Understanding FDIC Insurance
Given the media surrounding the SVB collapse, it’s natural to wonder how protected your money actually is within a bank. It’s important to be aware of your rights and how these institutions can keep your money safe.
There are several organizations that have been set up for this exact reason-to protect consumers’ financial assets , including the FDIC which covers deposits in banks and savings associations.
Let’s talk about how the FDIC works in more detail below.
How does FDIC insurance work?
Established during the Great Depression, the Federal Deposit Insurance Corp(opens in new tab) (FDIC) ensures that your bank deposits are safe, even if the bank goes under. The FDIC — which is funded by premiums paid by banks and savings associations — protects up to $250,000 in individual deposit accounts and up to $250,000 for each person’s share of joint accounts.
FDIC insurance covers money in checking, savings and money market deposit accounts, certificates of deposit (CDs) and official items issued by a bank, such as cashier’s checks and money orders.
The coverage extends to depositors’ accounts at each insured bank, including IRAs, living trust accounts and payable-on-death accounts.
The FDIC doesn’t insure money invested in stocks, bonds, mutual funds, life insurance policies or annuities, even if these investments are purchased at an insured bank. It also doesn’t cover safety deposit boxes or their contents.
What is the FDIC insurance limit?
Federal Deposit Insurance Corp. (FDIC): Insures $250,000 per depositor, per bank, for each account ownership category.
What it covers: checking, savings and money market deposit accounts, certificates of deposit, cashier’s checks, and money orders.
How to get your money back: If your bank fails, you don’t have to do anything — the FDIC will contact you with information on how your insured funds will be returned.
As always, we are here to help guide you through these decisions. Don’t hesitate to give us a call with any questions or concerns.
This material was prepared by Kiplinger.