The Federal Deposit Insurance Corporation (FDIC) is an independent government agency that protects bank depositors against losses (up to a certain limit) if an FDIC insured bank fails. The FDIC is funded by premiums that member banks pay for deposit insurance coverage. Since its creation in 1934 following a series of bank failures in the late 20s and early 30s, no depositor has lost a penny of insured funds at an FDIC insured bank because of a bank failure. 1 Insurance Coverage Limits “The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each ownership category.”2 For a single account (owned by one person) the FDIC will insure all deposits up to $250,000 per insured bank. 3 For example, if a single account owner has a $10,000 checking account and $20,000 worth of Certificates of Deposit (CDs) at the same FDIC insured bank, all $30,000 at this bank is insured because it is below the $250,000 limit. On the other hand, if this same single account owner deposits $240,000 into their checking account, they will now be over the $250,000 limit since they will now have $270,000 at this bank ($250,000 in their checking account plus $20,000 worth of CDs) and they will have $20,000 in uninsured deposits. For a joint account (owned by more than one person), the FDIC will insure all deposits up to $250,000 per co-owner. 4 For example, if a couple has $200,000 in their joint checking account and $100,000 worth of CDs owned jointly at the same FDIC insured bank, all $300,000 at this bank is insured because the amount per depositor ($150,000) is below the $250,000 limit. The FDIC website offers a tool to help you calculate your insurance coverage: https://edie.fdic.gov Credit Unions While credit unions are not covered by FDIC insurance, the National Credit Union Administration (NCUA) offers similar deposit insurance for its member institutions: up to $250,000 per depositor, per credit union, for each ownership category.5 The NCUA website offers an insurance estimator to calculate your insurance coverage: https://mycreditunion.gov/share-insurance-estimator-home What if you Have Uninsured Deposits? If you exceed the FDIC insurance limits at your bank, the most straightforward way to safeguard uninsured funds is to move those uninsured funds to another FDIC insured bank. Another option would be to consider moving uninsured deposits to different ownership categories. FDIC insurance covers $250,000 for each ownership category, even within the same bank.
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