FDIC insurance is meant to protect the cash deposits of investors who place money at these member banks. This generally means that money deposited in checking, savings, and Certificate of Deposit (CD) accounts is protected against the bank going out of business. Outside investments such as mutual funds, stocks, bonds, and money market accounts are generally not protected, even if they are held at a FDIC member bank.
FDIC Insurance is backed by the “full faith and credit of the U.S. Government.” This is the same level of protection that is afforded to Savings and Treasury Bonds issued directly by the United States Treasury. In other words, for FDIC insurance to not cover a bank’s failure, the U.S. Government would have to be in default. If this is the case, you’ve got bigger problems to worry about than your account disappearing!
As comforting as FDIC insurance is, there are dollar limits. Individual investors are only protected up to $100,000 in qualifying deposits at each member bank. If the investor has accounts at five different banks (not just different branches, but completely different banks), then all five accounts are covered up to $100,000 each. This limit is raised to $250,000 per bank for IRA’s.
For a married couple or any other type of joint account owners, the coverage is per individual, which essentially doubles the coverage on a jointly held account. For example, a husband and wife with a joint account at a member bank would be covered up to $200,000.
To find out if your bank is covered by FDIC insurance, as well as to see a great visual explanation of your coverage limits, be sure to visit the FDIC website at www.FDIC.gov.
