What Is the FDIC?
The FDIC is the Federal Deposit Insurance Corporation, an independent agency of the United States government. The FDIC was created in 1933 in response to the Great Depression and the failure of many banks. Its primary mission is to promote public confidence in the U.S. banking system by insuring deposits in banks and thrift institutions for up to $250,000.
The FDIC does not insure investments such as stocks, bonds or mutual funds. And, it does not insure deposits in credit unions.
How Does FDIC Insurance Work?
FDIC insurance is free and automatic for most deposit accounts at FDIC-insured banks and thrifts, including checking and savings accounts, money market deposit accounts and certificates of deposit. You do not need to apply for FDIC insurance.
There is no limit to the number of different deposit accounts you can have at one FDIC-insured bank and still be fully insured. For example, if you have a checking account, a savings account and a money market account at the same FDIC-insured bank, each account is separately insured up to $250,000.
The $250,000 limit applies to the total of all deposits you have at one FDIC-insured bank, including deposits in a joint account with someone else. It also applies to the total of all deposits you have in different ownership categories at the same FDIC-insured bank.
FDIC deposit insurance covers the balance of your deposit, no matter how much it changes from day to day. FDIC insurance is backed by the full faith and credit of the United States government.
What Happens to My Deposits if a Bank Fails?
If your bank fails, the FDIC will appoint another bank to take over your bank’s deposits and assets. This process is called “resolution.” Depositors usually are not aware that their bank has failed because the takeover happens quickly and smoothly.
If your bank is acquired by another bank, your deposits will automatically be transferred to the new bank. You do not need to do anything.
If you have a question about whether your bank is FDIC-insured, you can visit the FDIC’s website or call the FDIC’s toll-free number, 1-877-ASK-FDIC (1-877-275-3342).