What Does FDIC Insured Mean For Me?

Navigating the world of banking can feel overwhelming at times. With so many terms and acronyms, getting lost in the jargon is easy. One term you’ve likely come across is FDIC insured. But what exactly does it mean for you and your bank deposits? Let’s break it down.

What is FDIC Insurance?

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the U.S. Congress in 1933. Its primary purpose? To maintain stability and public confidence in the nation’s financial system. How does it achieve this? By insuring deposits at banks and savings institutions.

In simpler terms, when you see “FDIC insured” on your bank’s documents or website, your deposits are insured up to $250,000 at each FDIC-insured bank and are protected by the federal government. This insurance covers all types of deposits received at an insured bank, including savings accounts, checking accounts, money market deposit accounts, and certificates of deposit (CDs).

Why is FDIC Insurance Important?

Imagine you’re saving money for a rainy day, or perhaps you’re building a nest egg for your future. The thought of losing that hard-earned money can be unsettling, to say the least. This is where FDIC insurance steps in. Below are a few key benefits:

• Peace of Mind:
  • Depositors do not need to apply for or purchase FDIC deposit insurance. Coverage is automatic whenever a deposit account is opened at an FDIC-insured bank. If you want your funds insured by the FDIC, simply place your funds in a deposit account at an FDIC-insured bank and make sure that your deposit does not exceed the insurance limit for that ownership category.

• Encourages Trust in the Banking System:
  • FDIC insurance plays a crucial role in maintaining public trust in the banking system, encouraging people to deposit their money in banks rather than keeping it at home.
• Protection Against Bank Failures:
  • While unlikely, banks can fail. If your bank goes under, FDIC insurance ensures your money is safe, up to the insured limit.

How Much Does the FDIC Insure?

The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category. Curious about how these limits work? Here are some examples:

• Individual Accounts:
  • If you have a single account in your name at an FDIC-insured bank, your deposits are covered up to $250,000.

• Joint Accounts:
  • A joint account with two owners would be insured up to $500,000 (each co-owner’s deposits are insured up to $250,000).

• Retirement Accounts:
  • Certain retirement accounts, such as IRAs, are insured up to $250,000 per owner.

What Is Not Covered by FDIC Insurance?

While FDIC insurance covers many types of accounts, it does not cover everything. Below is a list of the types of accounts and products that would not be covered:

• Investment Products:
  • Stocks, bonds, mutual funds, and other investment products.

• Life Insurance Policies and Annuities

• Contents of Safe Deposit Boxes

How Can I Ensure My Deposits Are Fully Covered?

Want to make sure you’re maximizing your FDIC coverage? Here are a few tips:

• Diversify Across Banks:
  • Spread your deposits across multiple FDIC-insured banks to ensure all your money is covered. Remember, the $250,000 coverage limit applies per bank. Some banks, such as Lexicon, offer solutions to help with coverage for large balances.  Contact your banker for more information. 

• Utilize Different Account Ownership Categories:
  • Use various ownership categories (individual, joint, retirement) to utilize the $250,000 insurance limit per category fully.

• Stay Informed:
  • Regularly review your bank statements and FDIC resources to stay up-to-date on your coverage.

FDIC insurance is vital to the U.S. banking system, providing a security net for your bank deposits. It ensures that your money is safe, fostering trust and stability in the financial landscape. Whether you’re saving for a vacation or planning your retirement, understanding what “FDIC insured” means can give you the peace of mind you deserve.

Ready to take control of your financial future? Contact Lexicon Bank to learn more about FDIC insurance and how it protects your hard-earned money. If you have any questions or need further assistance, our team is here to help.

Feel free to book a consultation with one of our relationship bankers today! We’re here to ensure your financial well-being every step of the way.