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FDIC Insured Bank Account and Your Money

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Most people have heard about the term "FDIC," but it may not be well understood by them. The Federal Deposit Insurance Corporation or as it's more popularly known, FDIC, is a government agency insurance fund created to guard depositors against bank failure and loss of their savings up to $250,000. The following information tells the history of the FDIC, describes what FDIC Insured Account is, and how it works.

History of FDIC

The FDIC was created back in 1993 through the Glass-Steagall Act. It had one goal – to make people confident in the U.S. financial system by insuring customer deposits. It was one of Roosevelt’s many public corporations created during the “Great Depression”. The reason for its creation was to oppose a repeat of the banking system’s collapse and the global economic crisis of the 1930’s.

During that period, customers deposits were not insured. Banks only kept a small amount of their deposits in reserve, therefore customers lost their money during bank runs. The FDIC was created by the Banking Act in 1933 on a temporary basis. The agency was then made permanent by the Banking Act of 1935, and the way the organization operated was redefined.

The FDIC currently offers insurance coverage for deposits at over 9,000 banks and savings institutions with $16 trillion in assets and includes $10.54 trillion in customer deposits.

In the event of a bank failure, the FDIC reimburses a customer’s deposits from its Deposit Insurance Fund, which is funded by insurance premiums paid by its member banks. By the end of 2017, the Deposit Insurance Fund held an excess of $67.3 billion.

FDIC Insured Accounts – What Are They and How Do They Work?

Basically, if you have an FDIC Insured Account, it means the bank account is covered by the FDIC. However, you must meet some requirements in order to have such an account.

In the event of bank failure, FDIC guarantees each depositor’s account up to $250,000. The insurance applies to each ownership category for each deposit. Several categories of ownership qualify to be insured. Categories that could qualify as distinct ownership are, revocable/irrevocable trust accounts, corporations/unincorporated association accounts, and government accounts. Joint accounts that have the same withdrawal rights may also qualify for this category. Also, any account that is individual and is not included in any of the above categories may be considered as a distinct ownership category.

Still, you need to keep in mind that FDIC doesn’t insure credit unions. NCUA, short for The National Credit Union Administration, is the entity insuring most of the credit unions. Moreover, even though some products may be purchased through a financial institution, that doesn’t mean that they’re covered by FDIC. These include money market funds, mutual funds, life insurance policies, bonds, stocks, and annuities. In addition, the contents in a bank vault or safety deposit box are not covered by FDIC.

FDIC also observes certain bank activities in order to help these institutions work in a more efficient way. Additionally, FDIC makes sure that banks comply with the consumer-friendly laws. In case a bank suffers from bankruptcy, FDIC will be present to ensure that the right steps are taken to fix the damage. This could include talking to another financial institution or bank to take over the deposits or loans of the bank that was affected.

About Us

FDI Connect is a consumer-focused provider of FDIC pass-through insurance for bank deposits.  Through the Fortress Account, clients have access to our network of 400 of the highest yielding FDIC member banks in the nation.  This access allows our clients the peace and mind of insuring their entire cash balance (up to $35 million per account) while receiving 10x the average money market rate. 

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