UNITED STATES - SEPTEMBER 09: The Federal Deposit Insurance Corp. logo is displayed outside of the agency's headquarters in Washington, D.C. U.S. on Wednesday, Sept. 9, 2009. The FDIC proposed a six-month, emergency-only extension to its debt guarantee program as regulators move to wean companies from federal aid approved at the height of last year's credit crisis. (Photo by Andrew Harrer/Bloomberg via Getty Images)
FDIC insurance protects customer bank deposits in the event of a bank failure. The Federal Deposit Insurance Corporation, the independent government agency that runs the program, was set up in 1933 to restore faith in the financial system during the Great Depression. After all, when you entrust your life’s savings to a bank, you expect that money to be there when you need it.
But what does FDIC insurance cover? What are its limitations? And are there ways you can truly protect all of your money?
Is Your Money Fully FDIC Insured?
While you don’t need to do anything special to apply for FDIC insurance, you do need to be aware of its limitations. You may have heard that there’s a $250,000 cap on FDIC insurance, but there’s more to the story — for instance, you can
have more than $250,000 in deposits at the same bank and still be completely covered, depending on the type of accounts you have.
We’ll break down the FDIC’s requirements step by step so that you can easily double-check whether all of your money is insured.
Step 1: Make sure your money is at an FDIC member bank
FDIC member banks are required to post the FDIC logo both inside the bank and on their websites. Practically every bank has FDIC insurance these days, though it’s worth double-checking if you’re unsure. While there is no requirement that banks be FDIC members, stiff competition in banking has made it extremely hard for non-member banks to compete.
Note that credit unions are insured by a different federal fund called the National Credit Union Share Insurance Fund, which is very similar to the FDIC.
Step 2: Make sure your money is in the right kind of account
Once you know you’re doing business at an FDIC member bank, now it’s time to make sure your deposits are in an account that the FDIC will cover. FDIC insurance covers most of the accounts you’ll deal with in day-to-day banking, but not some more complex investments: