What Is The FDIC and How Does It Work?

You work hard for your money. You want to make sure it’s safe.

That’s where the FDIC comes in.

The Federal Deposit Insurance Corporation (FDIC) makes sure your money is protected when you deposit funds at a participating bank.

It’s rare, but banks can fail. A bank failure occurs when a financial institution can’t meet its obligations to creditors and depositors.

It’s a scary thought. But thanks to the FDIC, even if your bank goes bust, your money is insured up to $250,000.

Here is everything you need to know about the agency, including how FDIC insurance protects your deposits and what happens if your financial institution goes under.

What is the FDIC?

The FDIC is an independent federal agency. Its primary function is to protect depositors’ money from bank failures.

FDIC insurance is backed by the full faith and credit of the US government. In other words, the federal government guarantees your funds will always be accessible in an FDIC-insured bank.

Each depositor is covered up to $250,000, and accounts with different legal ownership are insured separately.

For example, if you have deposit accounts at three different FDIC-insured banks, you are covered up to $250,000 at each one.

Or if you own a savings account and a checking account at a single bank, they are both covered separately up to $250,000.

If you own a joint checking or savings account with someone, the account is insured up to $500,000 — $250,000 for each account holder.

Are Credit Unions FDIC-Insured?

Credit unions are regulated differently from banks. The National Credit Union Administration (NCUA) charters, regulates and monitors federal credit unions.

Credit unions maintain their own federal deposit insurance through the National Credit Union Share Insurance Fund (NCUSIF). This insurance is similar to FDIC, with up to $250,000 insured for each deposit account and owner.

Whether you deposit money at a bank or credit union, you can rest assured your…