As a responsible saver, you always strive to protect your hard-earned money. You choose a bank that is secure, reliable, and trustworthy. However, have you ever thought about what happens to your deposits if your bank fails? That’s where FDIC insurance comes in.
What is FDIC Insurance?
FDIC insurance, or the Federal Deposit Insurance Corporation, is a government-backed program that protects your deposits in case your bank fails or goes bankrupt. The FDIC was created in 1933 as a response to the Great Depression, which led to the failure of many banks and caused people to lose their savings.
Today, the FDIC continues to provide deposit insurance to banks and savings associations, ensuring that your deposits are safe and secure. FDIC insurance is backed by the full faith and credit of the United States government, so you can trust that your money is always protected.
How Much Does FDIC Insurance Cover?
FDIC insurance covers up to $250,000 per depositor, per account, at each insured bank. This means that if you have more than $250,000 in deposits at one bank, you may not be fully insured. However, you can increase your coverage by opening accounts in different ownership categories or at different banks.
The FDIC offers an insurance calculator that can help you determine your coverage limits based on your specific accounts and ownership categories. The calculator takes into account factors such as joint accounts, beneficiaries, and trust accounts.
How Does the FDIC Insurance Calculator Work?
The FDIC insurance calculator is a simple tool that asks you to input information about your accounts, including the bank name, account type, ownership category, and balance. The calculator then tells you how much of your deposits are insured and how much are not. It also provides suggestions on how to restructure your accounts to maximize your coverage.
Account Type |
Ownership Category |
Insured Amount |
Savings Account |
Single Account |
$250,000 |
Checking Account |
Joint Account |
$500,000 |
Certificate of Deposit |
Revocable Trust Account |
$1,000,000 |
Why Should You Use the FDIC Insurance Calculator?
The FDIC insurance calculator is a valuable tool for anyone who wants to protect their deposits and ensure that they are fully insured. By using the calculator, you can determine your coverage limits and take steps to restructure your accounts if necessary.
For example, if you have a joint account with your spouse that contains more than $250,000, you may want to open a separate account in your name to maximize your coverage. Or, if you have a trust account, you may want to name different beneficiaries to increase your coverage.
FAQs
Is FDIC insurance free?
Yes, FDIC insurance is free for depositors. Banks and savings associations pay premiums to the FDIC to fund the insurance program.
How do I know if my bank is FDIC-insured?
You can check if your bank is FDIC-insured by visiting the FDIC’s website and using the BankFind tool. This tool allows you to search for your bank and view its status and insurance coverage.
Is FDIC insurance only for US citizens?
No, FDIC insurance is available to anyone who deposits money in an FDIC-insured bank, regardless of citizenship or residency status.
Is FDIC insurance limited to US banks?
Yes, FDIC insurance is limited to banks and savings associations that are headquartered in the United States or its territories.
What happens if my bank fails?
If your bank fails, the FDIC will step in to protect your deposits. The FDIC will either transfer your deposits to another FDIC-insured bank or send you a check for the insured amount. You will not lose any of your insured deposits.
Overall, the FDIC insurance calculator is a valuable tool for anyone who wants to protect their deposits and ensure that they are fully insured. By using the calculator, you can determine your coverage limits and take steps to restructure your accounts if necessary. With FDIC insurance, you can have peace of mind knowing that your hard-earned money is always protected.
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