FDIC Deposit Insurance - What Does It Mean? Why is it Important?

FDIC Deposit Insurance helps us sleep at night. We’ll be the first to admit that deposit insurance isn’t the scintillating fodder of best-sellers in the world of financial wizardry. But, when it comes to finding a vehicle where you can stow cash that you want to keep as liquid as possible, the FDIC’s Deposit Insurance is hard to beat. 

If you’ve seen the classic movie, It’s a Wonderful Life, you’ll remember the scene where the Bailey Savings & Loan is on the cusp of failure, with the account holders descending upon the bank, threatening to pull out every last dollar from their savings accounts. Those scared residents of Bedford Falls fear that the money in their accounts will disappear, along with their financial goals and well-being. The FDIC, and its Deposit Insurance,exists to prevent those very situations from happening, just as they did in real-life during the Great Depression.

Today, in the world of FDIC Deposit Insurance, if your bank fails – as long as it’s FDIC-insured, the Federal Deposit Insurance Corporation (FDIC) steps in to cover losses up to $250,000 each, dollar-for-dollar, per depositor, per insured bank, for each covered account ownership category. That should have prevented the run on the Bailey Savings & Loan, but would have made that closing scene much less memorable.

But, what if you have more than the FDIC’s coverage amount of $250,000 to insure?

The $250,000 limit on FDIC Deposit Insurance is not strictly per-person; it’s also per-person, per-bank. That means that if you put less than $250,000 each into a series of FDIC-insured institutions, your FDIC coverage will exceed $250,000.

But, stretching your funds across multiple banks is time-consuming to set up, maintain, and report on at year-end for tax purposes. Today, individuals can maximize their FDIC coverage, past the $250,000 limit, by opening a Fortress Account with FDIConnect. Through our Fortress Account,  depositors maximize their FDIC coverage (up to $50 million) through a single account with a great yield (up to 10x the national average), all with the convenience of a single point-of-contact, a single stream of reporting, and one 1099 at the end of the year. That should help anyone sleep more soundly at night, even the present-day residents of Bedford Falls.

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[1]Please note that FDIConnect is not affiliated, associated, authorized, endorsed by, or in any way officially connected with the FDIC, or any of its subsidiaries or its affiliates. The official FDIC website can be found at https://www.fdic.gov/.

[2] For full information on how FDIC Deposit Insurance works, please visit: https://www.fdic.gov/deposit/covered/