Pulling up to your bank’s drive-thru window or walking up to a teller, you might see a sign saying the bank is FDIC insured. But what is the FDIC and what does that mean?
The Federal Deposit Insurance Corporation promotes public confidence in the U.S. financial system by insuring deposits in banks for up to $250,000. In other words, the FDIC protects you from losses if an FDIC-insured bank or savings institution fails. The FDIC is an independent agency of the federal government established in 1933 in response to Depression-era failures of financial institutions.
FDIC insurance covers all deposit accounts at participating financial institutions, including checking, savings, money market and certificates of deposit (CDs) up to the insurance limit. Even some IRAs and retirement accounts are insured. Money invested in stocks, bonds, life insurance policies, annuities or municipal securities is not covered. When investing, consider these FDIC options as another way to safeguard your money.
The $250,000 insurance coverage is temporarily raised from $100,000 through December 31, meaning the banking institutions might have to pay more to insure your money. The law does, though, make it easier to keep money at a single institution and avoid having separate account for larger deposits at different banks to qualify for FDIC coverage. Some financial experts expect this increase to remain permanent.
The FDIC’s web site, www.fdic.gov, also provides information on bank closings, letting you see if your bank is in danger of closing.
Also online at the FDIC is their tool called EDIE. EDIE lets you determine your estimated FDIC coverage at insured banks. Visit EDIE at www.fdic.gov/edie.