Understanding FDIC Insurance Per Account

When it comes to keeping your money safe in a bank, one of the most essential things you need to know is how the Federal Deposit Insurance Corporation (FDIC) protects your deposits. FDIC insurance is a government program that protects your money in case of a bank failure or closure. In this article, we’ll explore everything you need to know about FDIC insurance per account, including how it works, how much coverage you can get, and what types of accounts are eligible for coverage.

What is FDIC Insurance?

FDIC insurance is a means of protecting your deposits in a bank account in case the bank fails or goes bankrupt. The FDIC is an independent agency of the federal government that was created during the Great Depression to restore confidence in the banking system. It insures deposits in member banks for up to $250,000 per depositor, per account type, per ownership category.

FDIC insurance applies to deposits in various types of accounts, including checking accounts, savings accounts, money market deposit accounts (MMDA), and certificates of deposit (CDs). FDIC insurance does not cover investments, such as stocks, bonds, mutual funds, or annuities, even if you purchased them through an FDIC-insured bank.

How Does FDIC Insurance Per Account Work?

The FDIC insures each deposit account in a member bank up to $250,000 per depositor, per account type, per ownership category. This means that if you have multiple accounts in one bank, each account is insured separately up to $250,000. However, if you have multiple accounts of the same type, such as two savings accounts, the total coverage for those accounts is still only $250,000.

FDIC insurance applies to specific types of account ownership categories. These categories include:

• Single accounts – owned by one person
• Joint accounts – owned by two or more people
• Certain retirement accounts – such as Individual Retirement Accounts (IRAs)
• Revocable trust accounts – such as living trusts
• Irrevocable trust accounts – such as irrevocable trusts
• Employee Benefit Plan accounts – such as 401(k) plans

The FDIC also provides insurance coverage for business accounts, including sole proprietorships, partnerships, corporations, and unincorporated associations. These accounts are insured up to $250,000 per owner for each ownership category.

How Much Coverage Can You Get with FDIC Insurance Per Account?

The FDIC insures deposits up to $250,000 per depositor, per account type, per ownership category. This means that if you have $250,000 or less in a single account, you are fully covered. If you have more than $250,000 in a single account, only the first $250,000 will be covered by FDIC insurance.

If you have multiple accounts in the same bank, each account is insured up to $250,000 per depositor, per account type, per ownership category. For example, if you have a checking account with $200,000 and a savings account with $150,000 in the same bank, you are fully insured for a total of $350,000. However, if you have two savings accounts with $150,000 each in the same bank, only the first $250,000 of the total balance will be insured by FDIC.

FAQ

What happens if my bank fails?

If your bank fails, the FDIC will step in to protect your deposits. The FDIC will either reimburse you for your insured deposits or transfer your account to another FDIC-insured bank. This process may take several days to a few weeks, but you will not lose any insured deposits.

Is FDIC insurance free?

Yes, FDIC insurance is free. Member banks pay premiums to the FDIC to participate in the insurance program, but depositors do not pay anything. However, if you are depositing more than $250,000 in a single account, you should consult with your bank to make sure your deposits are fully insured.

What happens if I have more than $250,000 in deposits in one bank?

If you have more than $250,000 in deposits in one bank, only the first $250,000 will be insured by the FDIC. However, there are ways to increase your coverage. You can open multiple accounts in different ownership categories, such as a joint account and a trust account. You can also spread your deposits across multiple banks. Consult with your banker to determine the best approach for your situation.

What types of accounts are not covered by FDIC insurance?

FDIC insurance does not cover investments, such as stocks, bonds, mutual funds, or annuities, even if you purchased them through an FDIC-insured bank. FDIC insurance only applies to deposits in member banks.

Is FDIC insurance limited to U.S. citizens?

No, FDIC insurance is not limited to U.S. citizens. As long as you have a deposit account at an FDIC-insured bank, your deposits are insured up to $250,000 per account holder, per account type, per ownership category.

Conclusion

FDIC insurance is a critical part of keeping your money safe in a bank. With FDIC insurance, you can be confident that your deposits are protected up to $250,000 per account. By understanding how FDIC insurance works, you can make informed decisions about how to structure your accounts and deposits to maximize your coverage. If you have any questions or concerns about your FDIC insurance coverage, don’t hesitate to speak with your banker.