What is and is not covered by the FDIC when a Bank Fails

| August 14, 2008 More

Many Americans are worried about their bank failing. In other words, they have no idea what will happen to their money if their bank goes under. With more and more banks in trouble, it is safe to say that this concern is only going to increase in the months to come. That being said, you need to know what is covered by the FDIC and what is not. Even if your bank is in good standing, this is still something that is good to know. After all, you never know what is going to change in the future.

Generally speaking, the FDIC insures deposits in most banks and related institutions located in the United States. This helps to protect your money should your bank fail. To go along with this, it is good to know that the FDIC is backed by the United States government. This means that you can trust the fact that the FDIC will insure your money.

How much insurance does the FDIC provide? They provide $100,000 per depositer at each insured bank. You should also be aware that some retirement accounts are insured up to $250,000 per depositer, per bank.

As you can see, if you have more than $100,000 it is important to spread your money around. This will help to insure that all of your funds are covered. For instance, it is much safer to have $100,000 in two banks than $200,000 in one.

The FDIC covers money in checking, savings, NOW accounts, money market accounts, and time deposits such as CD?s.

Now that you know what is covered by the FDIC, it is important to know what is not covered. After all, there is a good chance that you have your money spread out amongst many investment vehicles. The FDIC does not insure money in mutual funds, stocks, bonds, annuities, life insurance policies, or U.S. Treasury bills. If you have money in any of these investments, you should be aware that they are not backed by the FDIC.

If your bank fails, it is nice to know what is and is not insured by the FDIC. In today?s day and age, it is important to keep this knowledge in mind.

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