FDIC: Protecting Your Deposits Up to $250,000

Understanding FDIC Coverage

The Federal Deposit Insurance Corporation (FDIC) is an independent agency that provides deposit insurance to depositors in FDIC-member banks. This insurance protects your funds in the event of a bank failure, up to a maximum of $250,000 per depositor, per insured bank.

Covered Accounts

FDIC coverage extends to the following types of accounts:

• Deposit accounts: Checking accounts, savings accounts, and money market accounts
• Time deposits: Certificates of deposit (CDs) and similar instruments with maturities of less than one year

Limits on Coverage

The FDIC coverage limit of $250,000 applies to the total amount of deposits held by a depositor in each insured bank. This includes funds held in all account types, including joint accounts.

How the FDIC Pays Out Deposits

In the event of a bank failure, the FDIC typically follows these steps to pay out insured deposits:

1. The FDIC closes the failed bank.
2. The FDIC assumes the deposits of the failed bank.
3. The FDIC arranges for another bank to acquire the failed bank's deposits and assets.
4. Depositors can access their funds through the acquiring bank.

Note: In some cases, the FDIC may liquidate the failed bank's assets and distribute the proceeds to depositors directly.

FDIC Failures in 2023

As of February 2023, the FDIC has closed three banks:

Stories of FDIC Protection

Story 1:

In 2018, First National Bank of Nebraska (FNBN) failed. The FDIC quickly arranged for HilltopBank to acquire FNBN's deposits and assets. Depositors were able to access their funds the next business day with no interruption in service.

What We Learn: The FDIC can act swiftly to protect depositors even in the event of a major bank failure.

Story 2:

In 2012, Silver State Bank failed. The FDIC liquidated the bank's assets and distributed the proceeds to depositors. Although some depositors lost a portion of their funds, they were able to recover a significant amount of their money thanks to FDIC coverage.

What We Learn: The FDIC provides peace of mind, knowing that your deposits are safe even in difficult financial times.

Story 3:

In 2011, Texas Gulf Bank failed. The FDIC arranged for Great Western Bank to acquire the bank's deposits and assets. However, due to a high volume of deposits, some depositors experienced delays in accessing their funds.

What We Learn: While the FDIC ensures that your deposits are protected, it is important to have a backup plan in place in case of delays during a bank failure.

Step-by-Step Approach to Depositing Safely

To ensure that your deposits are fully protected by the FDIC, follow these steps:

1. Choose an FDIC-member bank. You can check the FDIC's website to confirm that a bank is insured.
2. Spread your deposits among multiple banks. This will protect your funds if one bank fails.
3. Monitor your account balances regularly. Keep track of your deposits and ensure that they do not exceed the FDIC coverage limit.
4. Consider purchasing additional deposit insurance. If your deposits exceed $250,000, you can consider purchasing private deposit insurance from a reputable provider.

FAQs

Q: Does the FDIC cover investments such as stocks and bonds?
A: No, the FDIC only covers deposits in FDIC-member banks.

Q: What happens if the FDIC cannot find another bank to acquire the failed bank's deposits?
A: In this case, the FDIC may liquidate the failed bank's assets and distribute the proceeds to depositors.

Q: How do I file a claim for FDIC deposit insurance?
A: In the event of a bank failure, you will receive instructions on how to file a claim from the FDIC.

Q: Is the FDIC funded by taxpayers?
A: No, the FDIC is funded by assessments on FDIC-member banks.

Q: What is the difference between FDIC insurance and NCUA insurance?
A: FDIC insurance protects deposits in FDIC-member banks, while NCUA insurance protects deposits in credit unions.

Q: What is the FDIC's goal?
A: The FDIC's goal is to maintain stability and confidence in the U.S. financial system by protecting depositors from bank failures.

What to Do if Your Bank Fails

In the unlikely event that your bank fails, here are some steps you can take:

1. Remain calm. The FDIC will work to protect your deposits.
2. Monitor FDIC updates. Visit the FDIC's website or call the FDIC toll-free line for the latest information.
3. Follow FDIC instructions. The FDIC will provide instructions on how to file a claim and access your funds.

Call to Action:

Protect your hard-earned money by choosing an FDIC-member bank today. For more information on FDIC coverage and how to bank safely, visit the FDIC website.