Member FDIC

HOW SAFE IS MY MONEY?

You have probably seen “Member FDIC” on every bank statement you look at and been told that your money is at risk if you don’t see it. But what does the FDIC and its deposit protection do for you?

The FDIC (Federal Deposit Insurance Corporation) is an independent government agency that oversees the banking industry with the primary responsibility to insure customer deposits in case of a bank failure.

Here are four facts about the FDIC Insurance that you should know in determining if your money is protected:

1) Covers US member banks. Credit Unions are not covered under the FDIC and are generally insured by the National Credit Union Administration (NCUA).

2) Covers a variety of accounts held by the bank. Financial products like annuities, mutual funds, stocks, bonds and even brockeraged CDs are considered financial investments at full risk of loss and are NOT covered by the FDIC. Accounts covered by FDIC insurance include:

  • Checking accounts

  • Savings accounts

  • Money market accounts

  • CD accounts

  • Self-directed retirement accounts, including IRAs

  • Revocable and irrevocable trust accounts established at a bank

  • Bank-held employee benefit plans that are not self-directed

  • Corporation, partnership and unincorporated association accounts

3) The maximum coverage limit is $250,000. The standard insurance amount in the event of bank failure is $250,000 per depositor, per insured bank, for each account ownership category.

4) The coverage maximum can be applied more than once. The “per depositor” and “per insured bank” are straightforward, so breaking accounts over account ownership can help increase your insured amount. Account ownership categories include:

  • Single accounts (owned by one person)

  • Joint accounts (owned by two or more people)

  • Revocable and irrevocable trusts

  • Corporate accounts

  • Employee benefit plans held at an insured institution

So you could be insured for up to $1million if you and your spouse each held $250,000 in single owner accounts, there was an additional $250,000 in a joint account and the practice held $250,000 in a separate account.

In summary, if you have more than $250,000 at any one bank, you should consider ways to split up ownership OR spread your money across multiple banks. If you have questions about your personal FDIC coverage, you can use this great online tool.

Jeff Gullickson