If you’ve ever opened a savings or checking account at a banking institution, you’ve likely stumbled across the phrase “FDIC insured”, but what does that mean for you and your assets?

What Does it Mean to be FDIC Insured?

The term FDIC-insured means that your banking institution, whether brick-and-mortar or online, is insured by the Federal Deposit Insurance Corporation (FDIC).

If your bank is federally insured, more specifically, backed by the FDIC, your money remains protected in the event your banking institution goes under. Accounts covered by FDIC insurance are covered for up to $250,000, which means the FDIC pays customers of failed bank associations up to this insured limit.

Although bank failure in the U.S. has been particularly rare in recent years, it’s better to be safe than sorry. Choosing a financial institution with FDIC insurance, such as Marygold & Co. is one of the best ways to ensure protection for your money.

history of FDIC

The History of the FDIC

The FDIC is an independent federal agency established in 1933 by the U.S government in response to the bank failures that occurred during the Great Depression. Triggered by the stock market crash of 1929, people quickly rushed to banks to withdraw their assets, which further plummeted the already broken financial sector. When banks couldn’t pay customers back their deposits, Americans were quick to lose confidence in the banking system.

The main purpose of the FDIC was to promote public confidence in the banking system and to minimize the economic impact of a possible bank failure. To this day, the independent agency provides federal protections for the money customers deposit in banks. Since its founding in 1933, the FDIC claims that not one penny of insured deposits has been lost.

How Does the FDIC Work?

When you deposit your money at the bank, they then invest that money to earn revenue. These investments include loans to other clients, stocks, and other types of investment. Banks tend to play it on the safer side when investing. However, each bank is different, and with any investment comes the chance of losing money.

If a financial institution’s investment results in a big enough loss, they might be unable to meet the demands of customers who want to withdraw their money. When this bank failure occurs, the FDIC steps in.

FDIC insurance

What Does FDIC Insurance Cover?

If your bank goes under and is unable to return your cash deposits, the FDIC will reimburse you the amount of your held assets, even if the bank completely becomes, oddly enough, bankrupt.

The FDIC covers your common depositor’s accounts, but it’s important to note that not all financial products are covered. Here is what’s covered and what’s not:

Covered accounts:

  • Checking Accounts
  • Savings Accounts
  • Money Market Accounts
  • Certificates of Deposit
  • Retirement Accounts
  • Trust Accounts

Ineligible for insurance:

  • Mutual Funds
  • Annuities
  • Life Insurance Policies
  • Stock & Bond Investments
  • Municipal Securities
  • Safety deposit boxes and their content

FDIC Limits

The standard coverage limit is $250,000 per account holder in each ownership category included in the list of covered accounts above.

If you hold accounts in more than one ownership category, you may be qualified for a coverage larger than $250,000. For example, a couple with a joint FDIC-insured savings account are eligible for insurance up to $250,000 each. Additionally, if one of those individuals is the holder of a separate FDIC-insured depository account, that individual is also entitled up to the insured federal limit for that account.

Where Does the Money Come From?

The FDIC is funded by premiums paid for by financial institutions in return for deposit insurance coverage. Virtually every bank and savings institution in the country is insured by the FDIC, totaling trillions of dollars in deposits within the U.S financial system.

FDIC insured bank

What Else Does the FDIC Do?

In addition to protecting cash deposits, the FDIC also provides oversight for banks and thrift institutions to ensure activities promote safe banking environments. They are also responsible for sourcing other banks to take over the accounts of failed institutions.

Does the FDIC Protect You From Identity Theft?

Although customers are insured up to $250,000 on eligible depositor’s accounts, the FDIC does not protect against identity theft or the losses that accompany it. To protect yourself against identity theft and fraud, it’s best to practice safe online banking methods such as using a secure network and having a strong password.

Safe and Covered

Marygold & Co. delivers a digital alternative to physical branch banking that allows clients to control their finances and earn interest anytime, anyplace, and with no minimums or credit checks.

Additionally, FDIC-insured debit and savings accounts through Marygold & Co. are available to anyone in the United States, helping clients all over the country send, receive, spend and save money securely and safely through their mobile devices.

**Marygold & Co. is a financial technology company and not a bank. Depository services provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”). Deposits insured by the FDIC up to the allowable limit. LendingClub Bank is not an affiliate of Marygold & Co. (“Marygold”) and is not responsible for the products and services provided by Marygold. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice.