Financial well-being March 16, 2023 By
Coverage and Peace of Mind.
You see the FDIC logo when you visit a bank or see an advertisement for a bank in your local paper. But do you know what the FDIC is and what it provides to consumers and businesses?
FDIC stands for the Federal Deposit Insurance Corporation and it provides insurance that covers traditional deposit accounts like checking, savings, money market accounts, and certificates of deposit. When customers open one of these accounts with an FDIC-insured bank, the money deposited is instantly covered up to the current $250,000 limit. Not only is the coverage instant, but it is also automatic with their qualifying account. Customers do not need to apply for FDIC insurance.
The FDIC has been helping to provide peace of mind to consumers and businesses since 1933. This federal agency was created during The Great Depression when the money system was unstable. Since its inception, the FDIC can claim that no depositor has ever lost a penny of FDIC-insured funds. That's a good track record.
Why is coverage needed?
Bank failures are very uncommon occurrences in the twenty-first century. They were much more common during the 1930s when The Great Depression was wreaking havoc on the economy. When banks became insolvent, customers would literally lose their savings. The money in their accounts was gone and they had no recourse. With FDIC coverage, bank customers get up to $250,000 of their deposits back if a bank fails.
$250,000 limit?
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. You can increase your coverage by opening accounts in different ownership categories, such as individual, joint, and retirement accounts. Individuals could also consider using a CDARS program1: CDARS (Certificate of Deposit Account Registry Service)1 is a program that allows you to deposit funds in amounts greater than the standard FDIC insurance limit while still maintaining FDIC insurance coverage. The program works by dividing your deposit among multiple banks, each of which is insured by the FDIC up to the standard $250,000 limit.
"There are also options for business and consumer depositors who have balances larger than the standard $250,000 FDIC limit," says Ted Lane, Director of Treasury Management for First United Bank. "For instance, First United works with a network of other FDIC banks to diversify business deposits so that large depositors can feel secure knowing that every penny is covered by the FDIC."
It's important to note that FDIC insurance does not cover losses due to fraud or theft. If you suspect fraudulent activity on your account, contact your bank immediately.
Growth and guaranteed coverage.
When the financial world gets turbulent, it's nice to have a port in the storm. With FDIC-insured banks like First United, you have a place where your money can keep growing in accounts secured by coverage from the Federal Government.
If you want to learn more about the FDIC, you can visit www.FDIC.gov or talk with one of your local First United bankers. Visit our Locations page to find a nearby Community Bank.
- Deposit placement through CDARS or ICS is subject to the terms, conditions, and disclosures in applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through CDARS or ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi Cash Service and the IntraFi hexagon are service marks, and IntraFi, ICS, and CDARS are registered service marks, of IntraFi Network LLC.
