What is FDIC Insurance and What are Coverage Limits ?

FDIC insurance helps you to protect your money deposit in a bank if your bank fails. However there are some coverage limits.

FDIC Insurance Works

  • If your federally insured bank fails Federal Deposit Insurance Corp. Insurance keeps your amount safe
  • If a bank is federally insured it will have the FDIC insurance logo on its website
  • The FDIC insures upto $250,000 per depositor, per owner ship category and per institution
  • FDIC insures deposit accounts and other official items like of cashier checks and money orders.

Sometimes a bank fails, a customer amount is saved as long as bank is federally insured. A bank that federally insured is backed by the Federal Deposit Insurance Corp. Credit unions offer protection and through the National Credit Union Administration. The FDIC insures upto $250000 per depositor per institution. FDIC insurance starts only if a bank fails.

What is the benefit of having FDIC insurance

Having FDIC insurance means your money upto a certain limit is safe if your bank fails.The FDIC was established in 1933 in response to the many bank failures. Its sole purpose is to grow public confidence in the banking system by insuring consumer deposit. In 2020 Ericson State Bank, The First State Bank has failed.Since the creation of FDIC no single penny of insure deposit has been lost.

FDIC is not free. It has some cost. But bank customer do not pay a monthly fee nor from your tax money. The bank pays the premiums.

FDIC insurance: What is covered

The FDIC insurance covers up to $250000 per depositor per institution and per ownership category. FDIC insurance cover the following deposit accounts and other official itmes

  • Savings
  • Checking
  • Certificates of deposit
  • Money Market accounts
  • Money orders and Cashier Checks
  • Negotiable order of withdrawal accounts

FDIC insurance What is not covered

FDIC insurance does not cover following

  • Life Insurance Policies
  • Municipal Securities
  • Content of a safe deposit box housed at a bank
  • Investment in bonds ,stocks or mutual funds
  • Annuities
  • Loss incurred from investments

US bonds, notes and Treasury bills are covered by full faith and credit of the federal government.

FDIC Insurance Limits

Ownership Category

It means who owns the account.


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