How much money is guaranteed if a bank fails?

Protecting Your Savings: Understanding FDIC Insurance

In today’s uncertain economic climate, the security of our savings is paramount. The Federal Deposit Insurance Corporation (FDIC) plays a crucial role in safeguarding your hard-earned money by providing depositors with insurance coverage in the event of a bank failure.

FDIC Coverage Limits

The FDIC protects up to $250,000 per depositor, per account type, in the following categories:

• Demand deposit accounts (checking accounts)
• Negotiable order of withdrawal (NOW) accounts
• Savings deposits
• Money market deposit accounts (MMDAs)
• Certificates of deposit (CDs)

Coverage Types

The FDIC coverage is applicable to individual accounts, joint accounts, and trust accounts. However, the coverage limits apply separately to each account type. For example, a single depositor with a checking account and a savings account would be insured up to $250,000 for each account, totaling $500,000 in combined protection.

Account Ownership

The FDIC insurance coverage is based on the legal ownership of the account. Joint accounts are insured up to $250,000 for each account owner, regardless of how much each individual contributed.

Beneficiaries of Trusts

When a trust is the account holder, the insurance coverage applies to the beneficiaries of the trust, not the trustee. Each named beneficiary is insured up to $250,000 per account type.

Benefits of FDIC Coverage

The FDIC insurance coverage:

• Protects savings in the event of a bank failure
• Provides peace of mind that your money is safe
• Encourages confidence in the banking system

Limitations and Exclusions

While the FDIC insurance provides substantial protection, there are some limitations and exclusions to be aware of, including:

• Coverage does not apply to brokerage accounts or investment securities
• Only deposits held in FDIC-insured banks are covered
• The FDIC may temporarily delay access to funds during a bank closure

Conclusion

The FDIC insurance coverage safeguards your savings up to $250,000 per depositor, per account type. By understanding the coverage limits and account ownership rules, you can ensure that your money is protected in the event of a bank failure. This insurance provides financial security and peace of mind, giving you confidence in the stability of your savings.