How the FDIC protects your money

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 Corporation, or 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.