What Is Fdic Insurance?

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FDIC insurance is a type of insurance that is offered by the Federal Deposit Insurance Corporation (FDIC). This insurance is designed to protect depositors in the event of a bank failure or other financial institution. When a bank or other financial institution fails, the FDIC will reimburse depositors up to a certain amount. The amount of insurance coverage depends on the type of account the depositor has and the balance of the account.

History of FDIC Insurance

FDIC insurance was established by the Banking Act of 1933. This act was passed in response to the wave of bank failures that occurred during the Great Depression. During this time, hundreds of banks failed, leaving their depositors with no way to recover their savings. The FDIC was created to prevent this from happening in the future by providing a guarantee of security for depositors.

How FDIC Insurance Works

The FDIC insures deposits up to a certain amount. This amount is known as the insurance limit. The insurance limit is set at $250,000 for each depositor, per insured bank. This means that a depositor can have up to $250,000 in their account at any one time and still be covered by the FDIC. If the balance in the account exceeds the insurance limit, then the excess amount is not insured.

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Types of Accounts Covered by FDIC Insurance

FDIC insurance covers most types of deposit accounts. This includes checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). It also covers certain types of retirement accounts, such as IRAs and Keoghs. It does not cover mutual funds, stocks, bonds, annuities, or other investments.

What Happens If a Bank Fails?

If a bank or other financial institution fails, FDIC insurance will reimburse depositors up to the insurance limit. This means that depositors will not lose any of their money up to the insurance limit. The FDIC will also attempt to transfer the depositor’s funds to another bank, so that the depositor can continue to access their funds.

Are There Any Exceptions to FDIC Insurance?

There are some exceptions to FDIC insurance. For example, deposits held in foreign branches of U.S. banks are not covered by FDIC insurance. Additionally, certain types of deposits, such as business accounts, trust accounts, and joint accounts are subject to different insurance limits.

What Should You Do if You Have Questions About FDIC Insurance?

If you have questions about FDIC insurance or any other banking issue, you should contact your bank or other financial institution. They should be able to provide you with all the information you need to understand your coverage. Additionally, you can visit the FDIC website for more information about FDIC insurance and other financial topics.


FDIC insurance is an important way to protect your deposits in the event of a bank failure. It is important to understand the insurance limits and the types of accounts that are covered by the FDIC. Additionally, you should be aware of any exceptions to the FDIC insurance coverage. If you have any questions about FDIC insurance, you should contact your bank or other financial institution.

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