How Does FDIC Insurance Work?
Several banks nationwide have been closed by the Federal Deposit Insurance Corporation (FDIC), raising concerns about the safety of their deposits.
However, as a reputable financial institution, FSB wants to assure customers that their financial safety and security is the bank's top priority.
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What Makes FSB Different?
With one of the strongest capital positions of any bank or credit union in the Eastern Iowa area, we are confident in our ability to protect our customers' assets.
In addition, our relationship-based banking business model reflects our commitment to our community, where we live, work, and worship.
As such, we are dedicated to assisting our customers and all community members in achieving financial wellness through education and guidance.
Our knowledgeable bankers are well-versed in FDIC insurance coverage and are eager to help educate any customer or community member who may have questions.
What Causes Bank Failures?
Bank failures can arise from various factors, and mismanagement of funds is a prevalent cause. Banks that engage in risky practices or fail to manage their assets and liabilities efficiently may find themselves in financial distress.
For instance, a bank that extends excessive credit to borrowers unlikely to repay their loans may jeopardize its financial position, or a bank that invests heavily in speculative investments may suffer significant losses that may prove irrecoverable.
However, FSB prioritizes the security and protection of our customer's assets, and maintaining one of the most substantial capital positions of any bank or credit union in the Eastern Iowa area is a testament to this commitment.
We focus on ensuring that your funds are secure and accessible and take pride in providing reliable financial services to our customers.
What is FDIC Insurance?
In addition to vaults, security guards, and fraud protection, a higher level of security protects your funds—the FDIC or Federal Deposit Insurance Corporation.
During the Great Depression, the FDIC was created by the Federal Banking Act of 1933. Congress wanted a mechanism to guarantee the safety of deposits in member banks.
The FDIC is an independent U.S. government agency that maintains stability and public confidence in the financial system by protecting depositors of insured banks against the loss of their deposits if a financial institution fails.
How Does FDIC Insurance Work?
The FDIC's supervision program promotes the safety and soundness of FDIC-supervised financial institutions, protects consumer rights, and supports community investment initiatives.
FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and accrued interest, up to $250,000 per depositor.
What Accounts Are Covered By FDIC Insurance?
Thousands of financial institutions, including Farmers State Bank, are FDIC-insured.
The FDIC covers:
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Certificates of deposit
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Money market accounts
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Traditional checking and savings accounts
However, some items the FDIC does not cover include:
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Mutual funds
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Safety deposit box contents
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Annuities
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And other investment-related accounts
You may qualify for more than the current $250,000 in coverage, depending on your account type and ownership category.
For details, ask your banker or visit the FDIC website.
Additional FAQs: FDIC Insurance
What is FDIC insurance and how does it work?
- FDIC insurance is a government-backed guarantee that protects depositors if an FDIC-insured bank fails. It covers deposits dollar-for-dollar, including principal and interest, up to the coverage limit. If your bank closes, the FDIC either moves your deposits to another insured bank or issues you a check for the insured amount.
How much FDIC coverage do I get per bank?
- The standard FDIC coverage limit is $250,000 per depositor, per insured bank, per ownership category. This means you could have more coverage if you hold accounts in different ownership categories, such as individual, joint, or trust accounts.
Which accounts are covered by FDIC insurance?
- FDIC insurance covers:
- Checking accounts
- Savings accounts
- Money Market deposit accounts
- Certificates of deposit (CDs)
- Coverage applies at each FDIC-insured bank where you hold deposits.
Are CDs, money market, and savings FDIC insured?
- Yes. Certificates of deposit, money market deposit accounts, and traditional savings accounts at FDIC-insured banks are covered up to the standard $250,000 limit per depositor, per ownership category, per bank.
What is not covered by FDIC insurance?
- FDIC insurance does not cover mutual funds, stocks, bonds, annuities, life insurance policies, safe deposit box contents, or other investment products.
Can I get more than $250,000 in FDIC coverage?
- Yes. You can increase your insured amount by spreading funds across different ownership categories or multiple FDIC-insured banks. For example, joint accounts and individual accounts are insured separately, which can raise your total coverage at one institution.
Helpful Links
Here are some helpful resources to help answer more of your questions!
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