What if you want to put your savings in a bank? Will your savings be safe? What would happen if your bank closed or was shut down? What protection do you have against losing your cash?
The FDIC, or Federal Deposit Insurance Corporation was established in 1933. Ever since its inception, no depositor has lost a single dime from their FDIC-insured funds. The independent agency of the US government does not only insure US citizens, they insure other citizens from other countries as well as long as the banks they bank with are insured by FDIC.
An FDIC-insured account means that your bank account is backed by the US government in full credit and full faith. This reputation is something that other insurers cannot offer. Operating for over 70 years now, the FDIC is the people’s support system when or if their banks close. The insurance limit for every account you open in an insured bank is $250,000. The agency however does not insure money invested in mutual funds, stocks, bonds, life insurance policies, municipal securities, and annuities even if the said investments are made in insured banks. The other types of accounts that the FDIC does not cover are safe deposit boxes and their contents. US treasury bills, notes or bonds are not insured by the FDIC as well but they are backed by the US government.
Deposit insurance protects your money?
FDIC-insured accounts range from checking, savings, money market deposit, to time deposits and negotiable order of withdrawal (NOW). The depositors given this insurance are those who bank with insured banks. Banking with an FDIC-insured bank means your money is protected dollar for dollar. If you own two accounts in two different banks and these banks are FDIC-insured, it means that your two accounts also have the FDIC protection. This means that if these two banks close, you will have an insurance of $250, 000 for each account. If you have two accounts in one bank, you will not get two FDIC insurance, just one.
For each bank that you bank with that is FDIC insured, you are covered for $250,000. This insurance will run through until December 13, 2013. By 2014, the said allocation per depositor will go back to $100,000 except for certain retirement accounts which will retain their $250, 000 per depositor insurance in every insured bank.
If your bank account is with an FDIC-insured bank and it closes, your money will be protected. Although this is something that most of us never imagine to happen, it is better to be safe than sorry.
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