• What is FDIC and How Does It Work?

  • With all the turmoil in the banking industry today, it may be a good time to revisit what the FDIC is, how it works, and how you can make sure you are covered.

    What is the FDIC?

    The Federal Deposit Insurance Corporation protects bank depositors as an independent agency of the US government against the loss of their insured deposits. The FDIC protection is initiated when an FDIC-insured bank or savings association fails and is backed by the US government.

    How does FDIC insurance work?

    The limit for FDIC coverage is $250,000 per depositor, per bank in each account ownership category. However, the bank must be an FDIC-insured bank. If you are unsure how much coverage you currently have, check using this FDIC calculator.

    You do not have to “apply” for FDIC insurance. It is automatically applied to any covered deposit account established at an FDIC-insured bank.

    If a bank fails - then what?

    Banks fail, they do. Not very often, but if they do fail here is what happens.

    The FDIC will pay depositors up to the insurance limit, usually within a few days after the bank closes. This will be either in the form of a new account at another insured bank or a check will be issued to the depositor.

    For uninsured funds (funds that exceed the FDIC limits), the depositor may receive some portion of the funds as the bank assets are sold.

    How do I check to see if I am covered under FDIC?

    If you want to ensure that you are covered by the FDIC, you can check your statement to see if your deposits are FDIC insured and/or call you local bank branch. Again, how much coverage depends on the ownership and limits. It is also important to note that not all types of accounts, such as annuities and mutual funds, have FDIC coverage. For more information on what type of accounts are not covered refer to the FDIC’s website.


    While no one wants to have to think about the possibility of their bank failing, it is the power of knowledge that will keep the depositor safe. Click here to learn more facts about FDIC insurance and resources.

  • The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.