What is FDIC insurance?
What is FDIC insurance?
Thanks to FDIC insurance, checking, savings and other deposit bank accounts are considered to be the safest, lowest risk places to keep your money. You’ve probably seen FDIC signs at your local branch or heard “member FDIC” in a bank advertisement, but you may not know the origins of this insurance that is a bedrock of our financial system or how smart account structuring can help maximize your protection.
FDIC insurance came out of The Great Depression.
The Federal Deposit Insurance Corporation (FDIC) was established as part of the Banking Act of 1933 in response to the many bank failures that occurred during The Great Depression. In order to restore confidence in the banking system, the FDIC insured up to $2,500 per depositor, assuring that their money was safe even in the event of a bank run or failure. Over time the FDIC has evolved, including substantially raising the coverage limit. To this day, no depositor has lost funds insured by the FDIC due to a bank failure.
What does today’s FDIC coverage look like?
Currently, the United States government provides FDIC insurance up to $250,000 per depositor, per insured bank and for each account ownership category. This protection extends to a wide rage of deposit accounts including checking, savings money markets and certificates of deposit. In the unlikely event of a bank failure, the FDIC will either issue depositors a direct payment of the insured funds or transfer those deposits to a different FDIC-insured institution. Both options are designed to minimize any delay in depositors’ access to funds.
Why does FDIC insurance matter?
These days, bank failures are a very rare occurrence, and, for many people, insured deposit accounts are only one part of their diversified financial portfolios. However, having access to safe, liquid funds is critical to striking the right balance of spending, saving and investing activities to help you meet your personal goals. Fully understanding how FDIC insurance works will help you make smart financial decisions.
For example, high net worth individuals with deposits in excess of $250,000 can still have the peace of mind of fully-insured deposits at one bank. One way is through strategic account structuring. Remember, FDIC insurance covers up to $250,000 for each account ownership category. That means you can have a single-owner account, a jointly owned account and a trust account all at the same institution with each backed by the full faith and credit of the United States Government up to $250,000.
In addition, Fidelity Bank customers have access to CDARS® and ICS®, the IntraFi Cash ServiceSM, which offers multi-million dollar FDIC insurance at a network of banks while working directly with just us.* That saves you the hassle of managing multiple bank relationships while still enjoying the protection of having your large deposit eligible for FDIC insurance.
Questions about FDIC insurance and maximizing your coverage?
If you need assistance with determining the optimal account structure for your liquid funds in excess of $250,000, a private banker may be able to help. Reach out today to connect with a banker dedicated to delivering a personalized banking experience. That’s service beyond limits.
*Deposit placement through CDARS or ICS is subject to the terms, conditions, and disclosures in applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through CDARS or ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi, ICS, CDARS and Bank Safe, Bank Smart are registered service marks, and IntraFi Cash Services is a service mark of IntraFi Network LLC.
