One of the first pieces of advice people are given when it comes to choosing a bank is to make sure the bank is FDIC-approved. The FDIC (Federal Deposit Insurance Corporation) can help you to protect your money and working with an FDIC-approved bank is good advice. It is also smart to understand how the FDIC programs work and how they directly affect your money.
The Types Of Accounts The FDIC Covers
The FDIC insures deposits into savings, checking, IRAs, CDs, money market, and many other types of investment or savings account. Not every bank or financial institution is registered with the FDIC, which is why people always warn to only deal with an institution that is FDIC-approved. Without the FDIC, your money could be lost.
The FDIC will insure up to $250,000 per bank per investor. If an investor had $300,000 in savings accounts in a single bank, then that investor would only be covered for the first $250,000.
For joint accounts, the coverage is $250,000 per bank per account owner. If a couple had an account with $500,000 in it in one bank, then the entire amount would be covered. If that couple added another $200,000 to that account, then that money would not be covered.
The FDIC does not protect investors against bad advice or bad financial moves, nor does it pay out any interest that may have been lost when your bank went under. But the FDIC does help protect your money without you having to buy extra insurance and that is the kind of protection investors always like to have.
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