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With bank failures making news headlines recently, it’s not unusual to shift your attention to the safety of your personal bank account. We’ve all heard the term “FDIC insurance” bandied about recently, but what is FDIC insurance and how does it affect the average person? In this climate, knowing that your bank is insured by the Federal Deposit Insurance Corporation (FDIC) and understanding how the FDIC protects your money is more important than ever.
The FDIC is a U.S. government agency responsible for safeguarding consumers’ bank deposits in case of bank failure. The agency was created during the Depression as part of the New Deal to restore public confidence in the banking system. FDIC insurance covers deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Ownership categories include individual, joint, living trust and payable-on-death accounts, and IRAs, among others.1
On the individual level, FDIC insurance provides a safety net for American savers by ensuring that their deposits are secure. For instance:
All examples above are for illustrative purposes only.
On a larger scale, FDIC insurance promotes financial stability by reducing the likelihood of bank runs. A bank run occurs when depositors panic and withdraw their funds from a bank en masse, leading to insolvency. By reassuring consumers that their funds are secure even if a bank fails, FDIC insurance decreases the prospect of bank runs.
Remember that not all banks are FDIC-insured, so it pays to check your bank’s credentials. To find out if your bank is protected by the FDIC, ask a bank representative, look for the FDIC sign at your bank, or call the FDIC at 877-275-3342.2
Not all types of bank accounts are covered by FDIC insurance. See the table below for what the FDIC does and does not protect.2
The FDIC Insures: |
The FDIC DOES NOT Insure: |
Checking accounts |
Stocks |
Negotiable Order of Withdrawal (NOW) accounts |
Bonds |
Savings accounts |
Mutual funds |
Money Market Deposit Accounts (MMDAs) |
Life insurance policies |
Certificates of Deposit (CDs) |
Annuities |
Cashier’s checks |
Municipal securities |
Money orders |
Safe deposit boxes or their contents |
U.S. Treasury bills, bonds, or notes |
|
|
Crypto assets |
Since there are nuances to what the FDIC insures, it’s a good idea to check with your financial planner about whether your bank accounts are protected by the FDIC. Also, if your bank or banks are not FDIC-insured, a planner can guide you in finding an insured financial institution. Either way, you’ll have information that will help give you peace of mind about your money.
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Translations of any materials into languages other than English are intended solely as a convenience to the non-English-reading public. We have attempted to provide an accurate translation of the original material in English, but due to the nuances in translating to a foreign language, slight differences may exist.
Las traducciones de cualquier material a idiomas que no sean el inglés son para la conveniencia de aquellos que no leen inglés. Hemos intentado proporcionar una traducción precisa del material original en inglés, pero debido a las diferencias de la traducción a un idioma extranjero, pueden existir ligeras diferencias.
MMBB Financial Services is pleased to unveil our new website experience.
Watch a guided tutorial of our enhanced site to introduce you to important new features designed to help you live your life with financial confidence.
You will be linking to another website not owned or operated by MMBB. MMBB is not responsible for the availability or content of this website and does not represent either the linked website or you, should you enter into a transaction. The inclusion of any hyperlink does not imply any endorsement, investigation, verification or monitoring by MMBB of any information in any hyperlinked site. We encourage you to review their privacy and security policies which may differ from MMBB.
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