Federal Deposit Insurance Corp. is an independent federal agency that serves many functions. The Federal Deposit Insurance Corp.'s most important function is to insure money you deposit at a FDIC member bank. In the event of a bank failure, FDIC will typically cover up to $250,000.
FDIC insurance allows you to feel secure about keeping your money in an FDIC insured bank rather than under your mattress. Since 1933, the FDIC's founding, no depositor has ever lost even a penny. FDIC coverage is automatically activated when you open an account.
What is the FDIC?
Banking Act of 1933, passed by Congress in 1933, created the FDIC as a response to the financial crisis of the Great Depression. FDIC coverage of bank deposits up to $2,500 was implemented on January 1, 1934.
The stated goal of the FDIC is to "maintain stability and public trust in the financial system of this country."
The FDIC does not only insure deposits.
In order to pay creditors and depositors, liquidate the assets of financial institution that it has closed.
Who runs the FDIC?
The FDIC is governed by a five-member board. The U.S. Senate confirms three of the five members nominated by President Obama. Two other members of the board are the director of the Office of the Comptroller of the Currency, and the director of the Consumer Financial Protection Bureau. The FDIC budget for 2023 allows the equivalent of 6.310 full-time employees.
What is FDIC Insurance?
It is most well-known for its deposit protection. The Deposit Insurance Fund of the FDIC contained $116.1 billion as of March 31. According to federal law, FDIC must maintain $1.35 for every $100 in insured deposits.
FDIC insurance covers deposits in any bank that fails, so long as the bank is a FDIC member. FDIC insurance was available to nearly 4,700 banks as of March 31.
In the U.S., banks fail very rarely. During the first five month of 2023, however, the FDIC shut down three U.S.-based banks.
Signature Bank has approximately $88.6 Billion in deposits.
The FDIC acquired the majority of assets and deposits from the closed banks through three U.S.-based banks. The FDIC will issue a check to cover your insured deposit in two days after it has failed to find a buyer. After an FDIC insured bank closes, all accounts stop accruing interest.
You will lose money if you deposit money at a bank that is not insured by the FDIC. The FDIC limits its insurance to $250,000. If you had a single deposit at the bank that failed and it contained $255,000, then the $5,000 above the limit for a single account would not be covered.
The FDIC typically covers up to $250,000 for each depositor, and $250,000.00 per insured bank. The FDIC covers both principal and interest on an insured account.
Let's say that you only have one account (also known as a single account) at a FDIC-insured institution.
Certificate of Deposit for $200,000
If you have joint accounts at a bank insured by the FDIC, under both your name and that of another person, like your spouse, the math will change.
Imagine that you and your spouse own jointly a CD worth $350,000 and a savings account worth $150,000 at the same FDIC insured bank. The two accounts are added up and insured to a maximum of $500,000. This would result in $250,000 of insurance coverage per co-owner if divided between the spouses. This example assumes that the couple does not have any other joint accounts with the same bank.
What is covered by the FDIC?
FDIC insures a wide range of deposits made at FDIC-member banks. Included are:
Deposit accounts within irrevocable or revocable trusts.
The National Credit Union Administration (NCUA) insures your NCUA account deposits using the same formulas of $250,000 as the FDIC.
What the FDIC doesn't cover
The FDIC will not cover the following products offered by FDIC insured banks:
Safe Deposit Boxes and Their Content
FDIC does not cover fraud or theft losses, as these crimes aren't related to bank failures. The FDIC will not cover a loss if your checking account is emptied by a cybercriminal. Federal law offers protection in some cases, when money is stolen from a bank.
You should notify the fraud department of your financial institution as soon as you suspect that you have been a victim of fraud or theft.
How to verify your bank's FDIC status
Make sure that your bank deposit is insured by the FDIC. BankFind is the FDIC tool that will tell you if your bank has insurance.
Unless a bank is a member of the FDIC, its deposits are not insured by it. They may, however, be insured by another entity.
How to file a claim with the FDIC
You must provide proof along with a written claim to receive money from a failed bank.
The FDIC.gov site has a claims portal that you can use to file a claim. When you arrive at the home page, enter "Claims Portal", in the search bar.
You can also file a claim via mail. People who want to file a claim for the three failed banks in 2023 have been told to send it to:
600 N. Pearl St. Suite 700
Dallas, TX 75201
This address is a regional FDIC branch.