How the FDIC protects your money

Do you have a bank account? Learn if and how this government agency secures your savings.

You may have seen or heard the term “FDIC insured” when doing your banking or perhaps in an advertisement. If you’ve ever wondered what it means and why you should care, read on.

The Federal Deposit Insurance Corporationor FDIC, is “an independent government agency that Congress created to help maintain stability and public confidence in the nation’s financial system.”

The FDIC was formed during The Great Depression in 1933 after several bank failures caused people to lose all the money in their savings accounts. 

That’s why one of the most important things to know is that the FDIC provides deposit insurance. If your bank fails or goes out of business, your deposits are insured, and the FDIC will refund your money.

According to the organization, “FDIC insurance is backed by the full faith and credit of the U.S. government.” Since the FDIC began insuring bank deposits, no one has lost any insured money because of a bank failure.

FDIC coverage limits

FDIC deposits are covered up to $250,000 “per depositor, per insured bank for each ownership category.” This means the FDIC adds up all the individual accounts (like checking and savings accounts) held by the same person at one bank and insures the total amount of funds up to $250,000. Joint accounts (like a married couple’s checking account) are insured for up to $500,000.

If you’re lucky enough to have more than $250,000 in a bank, you can try dividing that money into different banks.

Note that you don’t need to purchase or request FDIC insurance if your bank is FDIC insured. The FDIC provides the coverage automatically. 

Ensure your money is FDIC-insured

It’s important to know, however, that not all financial products are FDIC insured, even if you purchased or invested in them through a bank. Uninsured products include stock and bond investments, mutual funds, crypto assets and life insurance policies.

Unfortunately, if you lose money from those investments or products, FDIC insurance won’t cover your loss. 

In choosing where to put your savings, know that money deposited with an FDIC-insured bank is your safest choice. To check if your money is protected, look for the FDIC sign inside the bank location. The words “Member FDIC” are typically on participating banks’ websites, but you may have to dig a bit to be sure. Or you can use the FDIC’s BankFind tool.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service, or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Bread Financial does not endorse any product or service, and is not responsible for the accuracy or reliability of the information, made available through such sites.

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