I’ve heard in some bank commercials that the account is FDIC insured. What does it mean?
FDIC stands for Federal Deposit Insurance Corporation. It is a federal agency that insures deposits in participating US banks, which protects the depositors if the bank goes bankrupt. It was formed as a result of the great depression, to boost depositor confidence.
Is there any limit to FDIC insurance?
Yes, the current limit is $250,000 per person.
Is this limit per person or per bank? When I have a million dollars, can I put it evenly in 4 different banks and be fully FDIC insured?
Very intelligent question Sooper Cooper! This limit is per person per bank, so yes, you will be FDIC insured for up to $250,000 in each bank you have an account in.
Is there any additional cost for FDIC insurance?
That’s the best part – banks have to pay a premium to FDIC for this protection, but it’s absolutely free for you.
What is not covered by FDIC insurance?
Most banks offer FDIC insured checking and savings accounts, as well as Certificate of Deposits and money market accounts. However, FDIC insurance only covers you against bank failure. It does not protect you against fraud or theft.
Stocks, bonds and mutual fund accounts are not covered by FDIC insurance. Accounts in credit unions are also not protected by FDIC – although they are protected through something called National Credit Union Share Insurance Fund – but that’s a topic for another time.
Podcast: What is FDIC and FDIC Insured
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
All you need to know about FDIC and FDIC Insurance: What is FDIC, What does FDIC insured account mean, Is there any limit to FDIC insurance, Is this limit per person or per bank, Is there any additional cost for FDIC insurance, What is not covered by FDIC insurance, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-fdic-federal-deposit-insurance-corporation-and-fdic-insured/