The importance of deposit insurance and understanding your coverage


The FDIC seal on the wall next to the United States flag

Top 5 things to know

Federal Deposit Insurance Corporation (FDIC) deposit insurance allows consumers to place their money with confidence in FDIC-insured banks and savings associations (insured banks) nationwide. FDIC Deposit Insurance is backed by the full faith and credit of the United States Government.

Here are some key things to know about deposit insurance:

1. What is covered by deposit insurance and how much?

The FDIC protects the money depositors place in insured banks in the unlikely event of an insured bank failure. Each depositor is insured up to at least $250,000 per insured bank.

FDIC deposit insurance covers all types of deposits held with an insured bank. This includes deposits into a checking account, negotiable withdrawal order account (NOW), savings account, money market deposit account (MMDA), certificate of deposit (CD) or other deposit account terms, as well as official bills issued by an insured bank. such as a cashier’s check or money order. FDIC insurance covers depositors’ accounts with each insured bank, dollar for dollar, including principal and any accrued interest up to the date of the insured bank’s failure, up to the limit of insurance.

FDIC deposit insurance covers various types of banking products, including:

FDIC deposit insurance covers:
Verify Accounts
Negotiable Withdrawal Order Accounts (NOW)
Savings accounts
Money Market Deposit Accounts (MMDA)
Certificates of Deposit (CDs)
Bank checks
Financial orders
Other official instruments issued by an insured bank

2. What is NOT covered?

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if those investments are purchased from an insured bank. .

FDIC deposit insurance does not cover:
Equity investments
Bond investments
Mutual fund
Life insurance policies
Municipal titles
Safes or their contents
U.S. Treasury Bills, Bonds, or Notes
Crypto assets

You should understand the terms and conditions of financial products offered by non-bank companies and how your funds may or may not be protected. It is important to know that non-bank companies are never FDIC insured. Even though they partner with insured banks, the money you send to a non-banking company is not FDIC insured unless and until the company deposits it with an insured bank.

FDIC insurance protects you only in the unlikely event that the insured bank goes bankrupt and does not protect you against losses due to the failure of the non-bank company or failure to meet its obligations to its customers. The failure or bankruptcy of a non-bank business can cause delays in accessing your money, even when your money has been deposited in a bank for your benefit.

3. How to calculate your coverage? EDIE!

FDIC Electronic Deposit Insurance Estimator (EDIE) is an online tool that can be used to determine if your accounts are fully insured at each insured bank where your deposits are held. EDIE allows you to enter dollar amounts you have on deposit with an insured bank or use a hypothetical scenario to determine your coverage.

The FDIC does NOT insure non-deposit investment products, such as stocks, bonds, government and municipal securities, mutual funds, annuities (fixed and variable), life insurance policies ( integer and variable), savings bonds, crypto assets, etc. EDIE is NOT an investment estimator (even if the investments were purchased from an insured bank).

4. When and how is deposit insurance paid?

Deposit insurance is paid in the event of the failure of an insured bank. When this happens, the bank’s chartering authority usually steps in to shut down the bank and brings in the FDIC as the deposit insurer. FDIC personnel are on the scene the day of the failure, working to identify those who secured money to the bank. In many cases, another bank agrees to buy the failing bank and the transition is smooth for depositors. If there is no immediate buyer, the FDIC maintains depositors’ access to their insured deposits.

For more information, visit: When a Bank Fails – Facts for Depositors, Creditors and Borrowers.

5. I have additional questions about deposit insurance, who can I contact?

The FDIC website has a page of Frequently Asked Questions (FAQ) on deposit insurance. You can also write and receive a response from the FDIC by visiting the FDIC Information and Assistance Center. If you would like to speak with a deposit insurance specialist, you can call: 1-877-ASK-FDIC (1-877-275-3342).

The FDIC is an independent agency of the United States government that protects you against the loss of your insured deposits if an insured bank fails. FDIC insurance is backed by the full faith and credit of the United States Government. Since the beginning of FDIC insurance in 1934, no depositor has lost a penny of insured deposit.

Additional Resources

Fact Sheet: What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies

Understanding deposit insurance

FDIC BankFind

Are my deposits FDIC insured?

Deposit Insurance Videos

The EDIE Calculator

FDIC Consumer News: Is the money on my prepaid card FDIC insured?

FDIC Consumer News: Avoiding Scams and Scammers

FDIC Consumer News: How does the FDIC protect consumers?

For more consumer resources, visit FDIC.govor go to FDIC Knowledge Center. You can also call the FDIC toll free at 1-877-ASK-FDIC (1-877-275-3342). Please send story ideas or feedback to [email protected].

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