Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that provides deposit insurance to protect depositors in case of bank failures. It was created by Congress in 1933 as a response to the thousands of bank failures during the Great Depression. The FDIC is headquartered in Washington, D.C. and has regional offices throughout the country.

History of the FDIC

The FDIC was created as part of the Banking Act of 1933, also known as the Glass-Steagall Act. The act was designed to restore confidence in the banking system after the widespread failures during the Great Depression. One of the key provisions of the act was the creation of the FDIC, which provided deposit insurance for up to $2,500 per depositor per bank. This helped to reassure depositors that their money was safe in the bank, even if the bank failed.

Over the years, the FDIC’s role has evolved to include not just deposit insurance but also regulation and supervision of banks. The agency has also responded to various banking crises, including the savings and loan crisis of the 1980s and the recent financial crisis of 2008.

The FDIC is funded by the premiums paid by banks for deposit insurance. The agency does not receive taxpayer funding.

Today, the FDIC insures deposits up to $250,000 per depositor per bank. This limit was increased in 2008 in response to the financial crisis.

In addition to deposit insurance, the FDIC also provides consumer protection and promotes community banking.

How the FDIC Works

The FDIC insures deposits in banks and savings institutions that are members of the agency. Banks pay premiums to the FDIC for this insurance, and the agency uses the premiums to pay depositors in the event of a bank failure.

If a bank fails, the FDIC becomes the receiver of the bank’s assets and liabilities. The agency then works to sell the failed bank’s assets and pay off its liabilities, including insured deposits.

Depositors do not need to do anything to receive FDIC insurance. It is automatic for deposits held in member banks.

FDIC Coverage Limits

The FDIC insures deposits up to $250,000 per depositor per bank, as of 2021. This limit applies to all types of deposits held in a bank, including checking accounts, savings accounts, and certificates of deposit (CDs).

Deposits held in separate banks are insured separately, so it is possible to have more than $250,000 in FDIC-insured deposits. For example, if you have $250,000 in a checking account at Bank A and $250,000 in a savings account at Bank B, both deposits would be fully insured.

Deposits held in different account types at the same bank are not insured separately. For example, if you have a checking account and a savings account at the same bank, the combined balance of those accounts would be insured up to $250,000.

FAQ

What is the FDIC?

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that provides deposit insurance to protect depositors in case of bank failures.

How does FDIC insurance work?

The FDIC insures deposits up to $250,000 per depositor per bank. Banks pay premiums for this insurance, and the FDIC uses the premiums to pay depositors in the event of a bank failure.

Is FDIC insurance free?

No, banks pay premiums to the FDIC for deposit insurance. The cost of the premiums may be passed on to customers in the form of fees or other charges.

How do I know if my bank is FDIC-insured?

Most banks in the United States are FDIC-insured. You can check if your bank is a member of the FDIC by looking for the FDIC logo on the bank’s website or in its branches.

What types of deposits are covered by FDIC insurance?

The FDIC insures all types of deposits held in a bank, including checking accounts, savings accounts, and certificates of deposit (CDs).