Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency created by the Glass-Steagall Act of 1933. The vast number of bank failures in the Great Depression spurred the United States Congress into creating an institution which would guarantee banks, inspired by the success the Commonwealth of Massachusetts experienced with Deposit Insurance Fund (DIF). The FDIC currently guarantees checking and savings deposits in member banks up to $100,000 per depositor.

Insured deposits

Deposits that are covered by insurance are deposits that are not invested in bonds or stocks. In reality the bank will invest the deposited money for its own business. But accounts like money market funds and mutual funds that invest in bonds and stocks for the sake of the customer are not insured.

Related Topics:
Bond - Stock - Money market funds - Mutual funds - Customer

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(Some banks offer a form of savings instrument confusingly called a Money Market Deposit Account (MMDA); these are insured savings accounts, intended to compete with the uninsured money market funds offered by brokerages).

Related Topics:
Money Market Deposit Account - Money market funds

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While the basic federal insurance amount is $100,000, you can receive more than $100,000 of coverage if your funds are maintained in different ownership categories, according to the FDIC. For example, you can have coverage of up to $100,000 for your individual accounts at the bank, another $100,000 for your share of joint accounts at the same bank, and yet another $100,000 for your retirement accounts there.

Related Topics:
Federal insurance - Individual account - Joint account - Retirement account

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You can also protect more than $100,000 by dividing the money among different financial institutions, with no more than $100,000 in any of them.

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