Blog Post
The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance to depositors with properly established accounts at a bank or savings and loan (S&L). Even though the FDIC was set up by the United States government, the FDIC is not funded by federal income tax dollars. Instead, it is funded by insurance premiums of member banks and by its own investments.
The FDIC also has access to a line of credit with the US Treasury for additional funds if needed. FDIC insurance at banks and S&Ls is similar to the deposit insurance protection at credit unions offered by the NCUA. The FDIC was established after the bank failures of the Great Depression and has provided security for depositors ever since.
Generally, each person’s accounts are insured up to a total of $250,000 and self-directed retirement accounts (IRAs) are insured separately up to $250,000. However, with multiple accounts, total coverage may be higher if the person has different ownership interests or rights in different types of accounts and all account forms are completed properly. Here are a few examples:
The rules can get somewhat complicated with different types of accounts, especially with children and trust accounts. Careful structuring can enable you to ensure that all your balances are protected.
Visit www.fdic.gov/edie to calculate insurance coverage on your personal accounts, or talk with a bank representative to make sure you get the maximum protection if your accounts exceed $250,000.
Deposit Insurance From The FDIC
- Mary Doe’s checking account balance is $80,000 and she has a $200,000 regular certificate of deposit. Her insurance is limited to $250,000.
- Mary Doe’s checking account balance is $80,000 and her savings account balance is $100,000. In addition, she has a $125,000 IRA certificate of deposit. All of the balances are insured because the IRA account is insured separately.
- Mary and John Doe’s joint checking account balance is $90,000 and they have a $200,000 certificate of deposit held jointly. All of their balances are insured.
This blog is provided for general information purposes only. The information provided should be used at your own risk and not as a substitute for legal and other professional advice in your state.