What Does It Mean to be FDIC Insured?

Most banks in the United States have to be FDIC insured in order to do business. Many people have heard of the term "FDIC insured," but they do not necessarily know what it means. Here are a few things to consider about FDIC protection and what it means to be FDIC insured.


FDIC stands for Federal Deposit Insurance Corporation. This is a government-sponsored enterprise that insurers all of the deposits of FDIC insured institutions. The basic idea behind the FDIC is that they are going to step in and reimburse account holders for the amount of money that they had in their accounts if their bank goes out of business.

What is Covered

Under the rules of the FDIC, any type of deposit that you put into a bank should be covered. This includes deposits into savings accounts, checking accounts, C Ds, certain types of retirement accounts, and negotiable order of withdrawal accounts. If you have money in any of these types of accounts, the FDIC is going to insure a certain portion of it.

What is Not Covered

Even though the FDIC covers many different types of accounts, there are certain things that they will not cover. For example, they are not going to cover any money that is invested in stocks, bonds, mutual funds, annuities, or any other type of investment. It does not matter if you purchased these securities from your bank or through a broker. They are not going to be covered under any circumstances.

Coverage Limits

The FDIC is going to reimburse you for the amount of money that you have in your account up to certain coverage limits. Until December 31, 2013, the FDIC is going to insure up to $250,000 per account holder per bank. After that date, the limit will go down to $100,000 per account holder per bank. 

If you are the owner of certain types of retirement account, you will get $250,000 worth of coverage even after December 31, 2013.

Increasing Your Coverage

Even though there are coverage limits, there are ways for you to increase your protection. For example, if you have more than $250,000 that you want to be protected in a bank account, you could open another bank account with a different bank. The rules state that you can only get $250,000 of protection from one bank. However, you can open as many bank accounts as you want with different banks and still be covered. For example, if you had $1 million, you could open four separate bank accounts with four different financial institutions and have FDIC coverage for the entire amount.

You could also spread your money out between family members if you wanted to. For example, you could open an account for one of your children and put $250,000 in it. This amount of money would be insured and you would still have access to it since it is in the name of a family member. 

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