FDIC Coverage

FDIC Coverage

fdicThe Federal Deposit Insurance Corp. (FDIC) is a unit of the US federal government that protects deposits in banks and thrift institutions up to a specific limit. Today, most types of consumer bank accounts are insured against loss for up to $250,000 per individual depositor in a given account in a given bank.

The FDIC was established in the mid-1930s, in the midst of the country’s Great Depression, to provide confidence in the banking system. Confidence was required in order for the banking system to operate without individuals making a “run” on the banks and demanding their money back all at once.

The FDIC does not insure other types of investments, such annuities, bonds, life insurance policies, municipal securities, mutual funds or stocks, regardless if these investments are purchased at an insured bank. Nor does it insure US Treasury bills, bonds or notes, although these investments are backed by the full faith and credit of the US government. Neither does the agency insure the contents of safe deposit boxes stored at insured banks.

FDIC insurance provides coverage for depositors’ accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank’s closing, up to the insurance limit.

Covered Accounts

FDIC Insurance covers all types of deposits received at an insured bank, including checking accounts, NOW (negotiable order of withdrawal) accounts, savings accounts, money market deposit (MMD) accounts, time deposits such as CDs, or an official item issued by a bank (such as a cashier’s check or money order). Also covered are accounts denominated in foreign currencies held in American banks, and accounts in foreign banks holding FDIC insurance.

For funds that depositors may have in different legal ownership categories, the FDIC provides separate insurance coverage. Thus, a bank customer with multiple accounts could qualify for more than $250,000 in coverage if his or her funds are deposited in different ownership categories and the conditions for every ownership category are met.

Funds deposited in different branches of the same insured bank are not separately insured.

Not all banks are insured by the FDIC. You can find out whether deposits in a particular bank are insured by the agency by going to the agency’s website, www.fdic.gov/deposit. Insured institutions also display the official FDIC teller sign where deposits are taken.