If you are concerned about the safety of your bank deposits, it is time to get FDIC insurance coverage. The FDIC or Federal Deposit Insurance Corporation is a United States government corporation established in 1933, under the Glass-Steagall Act. It offers deposit insurance at 7,895 institutions.
Why opt for FDIC insurance and what does it cover?
The money you deposit in a bank is invested by that financial institution. However, if those investments fail, your deposits may be in danger. Through an FDIC insured account your money is safe even if the bank fails. FDIC insurance covers all types of deposits at associated institutions. These deposits include:
- Savings accounts
- Checking accounts
- Certificates of Deposit
- Money market accounts
(Note: FDIC insurance does not include money market funds.)
What is not covered under FDIC insurance?
An FDIC insurance account does not cover Trust items that are not considered deposits. Such items include:
- Investments, such as stocks or mutual funds
- Contents of a Safety Deposit Box
- Insurance products, such as annuities
FDIC insurance also does not provide protection against crimes, such as identity theft or illegal use of your bank account.
To what extent does FDIC insurance provide coverage?
There is a limit to the extent an FDIC insured account provides coverage. Currently, FDIC insurance provides safety of deposits up to $250,000 per depositor. This limit is bound to remain unchanged until at least December 31, 2013. If you have a relatively high net worth, you can avoid any coverage issues by placing accounts in multiple banks covered by FDIC.