If you watch any banking commercials on television, you may have noticed that many banks mention that they are FDIC-approved. The statement is meant to give consumers a sense of security, but that only helps when people know what the FDIC is and understand what it does.
Protection Against Financial Collapse
Thanks to the Great Depression, thousands of United States banks failed between 1930 and 1933, leaving millions of Americans in desperate financial situations. In 1933, President Franklin D. Roosevelt signed the Banking Act of 1933 into law. It was legislation that was designed to prevent the type of financial collapse such as what was experience in the Great Depression. To do that, the Banking Act of 1933 created the Federal Insurance Deposit Corporation, also known as the FDIC.
The FDIC Protects Your Money
The FDIC is a government-run organization that protects up to $9 trillion in deposits in accounts in approved banks. The FDIC will insure up to $250,000 per investor per account in every approved bank. The accounts that are covered include checking, savings, IRAs, CDs, and mutual fund accounts. If your approved bank or financial institution fails, then the FDIC will step in and replace your money.
It is important to note that your bank or financial institution must be FDIC-approved for your money to be protected. Always look for the FDIC logo when you enter a bank to decide whether or not your money will be safe.
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