What is the FDIC?

In response to the many bank failures during the Great Depression, President Roosevelt signed the Banking Act of 1933, which established the Federal Deposit Insurance Corporation (FDIC). The purpose of creating the FDIC was not only to stabilize the banks, but also to bolster the public’s confidence in our banking systems. The FDIC accomplished this by ensuring bank patrons their money was safe and covered by the government should anything happen to their banking institutions. Despite recent events with Silicon Valley Bank (California) and Signature Bank (New York), it is rare for a bank to fail, but if a bank does fail, your money is protected up to $250,000 per depositor, per institution, and per ownership category if the bank is federally insured. For banks to be insured, they must apply for FDIC insurance and pay for the premiums like any other form of insurance. Banks with FDIC insurance enable customers to confidently place money there knowing their funds are backed by the full faith and credit of the United States Government.

What is covered by FDIC insurance?

• Checking accounts
• Savings accounts
• Money market deposit accounts
• Certificates of deposit
• Cashier’s checks
• Money orders
• Negotiable order of withdrawal accounts

What is not covered by FDIC insurance?

• Stock investments
• Bond investments
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities
• Safe deposit boxes and their contents
• U.S. Treasury bills, bonds or notes – however, they are backed by the full faith and credit of the federal government

Ownership types covered by FDIC insurance

• Single ownership
• Joint ownership
• Revocable trust accounts
• Irrevocable trust accounts
• Retirement plans like IRAs
• Employee benefit plan accounts
• Association accounts
• Government accounts

FDIC insurance limits and coverage examples

1. Single individual who banks at one institution and has the following:
   • $100,000 in a checking account
   • $100,000 in a savings account
   • $100,000 in a certificate of deposit

   This single individual has a total of $300,000 deposited as one depositor, at one institution, and in one ownership category (single). If this bank were to fail, this individual will lose $50,000 because the FDIC would only cover up to $250,000.

2. Single individual who banks at one institution and has the following:
   • $100,000 in a checking account at Bank 1
   • $150,000 in a savings account at Bank 1
   • $250,000 in a certificate of deposit at Bank 2

   This single individual has a total of $500,000 deposited as one depositor, at two institutions, and in one ownership category (single). Since this individual has spread their money across two banks, $250,000 in one bank and $250,000 at another, all their funds are protected if the bank were to fail.

3. Married couple who banks at one institution and has the following accounts:
   • $500,000 in a joint checking account
   • $250,000 in a savings account in the name of the first spouse
   • $250,000 in a certificate of deposit in the name of the second spouse

   The married couple has a total of $1,000,000 deposited at this bank and all their funds are protected.

   The checking account ownership category is joint, where both spouses are covered up to $250,000 each since both are different depositors.

   The savings account is in the name of the first spouse and is in one ownership category (single), so the first spouse is covered up to $250,000. The certificate of deposit is in the name of the second spouse, is also in one ownership category (single), and thus has coverage up to $250,000.

How to know if your bank is FDIC insured

• You can call and ask the FDIC toll-free at +1 (877) 275-3342
• Search for your bank online at FDIC.gov
• Look for the official FDIC signage at your physical bank location

What is the NCUA?

In 1970, Congress created the National Credit Union Administration (NCUA) to protect deposits made by credit union members, and, like the FDIC, it is backed by the full faith and credit of the United States Government. Like the FDIC, credit union members enjoy having their deposits insured up to $250,000 per member-owner, per insured credit union, and per account ownership category.

What is covered by NCUA insurance?

• Checking accounts
• Savings accounts
• Money market deposit accounts
• Certificates of deposit

What is not covered by NCUA insurance?

• Stock investments
• Bond investments
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities
• Safe deposit boxes and their contents

Ownership types covered by NCUA insurance

• Single ownership
• Joint ownership
• Revocable trust accounts
• Irrevocable trust accounts
• Retirement plans like IRAs
• Employee benefit plan accounts

How to know if your bank is NCUA insured

• You can call and ask the NCUA toll-free at +1 (800) 755-1030
• Search for your institution online at NCUA.gov
• Look for the official NCUA signage at your institution’s location

Ways to maximize FDIC and NCUA insurance

In March 2023, Silicon Valley Bank and Signature Bank collapsed after many clients withdrew their money from the two banks in fear they would fail. Luckily, because of the measures the FDIC has taken, the FDIC was able to step in and make customers who had deposits at these banks whole within a matter of days.

To protect your money and maximize the insurance coverage, you need to understand specific terminology such as per depositor, per insured institution, and per account ownership category, to name a few. Here are a couple of ways you can maximize insurance coverage by understanding the above terminology.

1. Per Depositor and Per Insured Institution: Spread your wealth by opening accounts at different institutions to ensure you have coverage up to $250,000 per depositor and per account ownership category. It is important to note that the FDIC and NCUA consider different branch locations of the same bank as one bank.
2. Per Account Ownership: Use multiple account ownership categories to your advantage. For example, at your local bank, you could have a single ownership savings account with $250,000 and a joint checking account with another $250,000 with your spouse. Although you have $500,000 at this bank, having separate account ownership categories qualifies you both to receive the maximum insurance coverage.