Ever wondered why we put our money in bank accounts? Aside from the convenience of direct deposit and online banking, what’s the real difference between placing our money in a bank and keeping it stuffed underneath our mattresses?
One of the many differences is simple—and incredibly important: FDIC insurance.
What Is the FDIC—and What Is FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) is a government agency that protects the money you deposit in bank accounts. It was established in the 30s to restore confidence in banking in the post-Depression era. Today, the FDIC supervises banking institutions, collaborates with other organizations to promote bank stability, helps manage bank failing events, and guarantees account holders that their deposits are safe up to a certain threshold.
That’s where FDIC insurance comes in. The FDIC insures bank deposits up to $250,000 per depositor (per bank, and per account ownership type).
That may sound great—but at the end of the day, what does all of this mean for you?
How Do My Bank and FDIC Insurance Keep My Deposits Safe?
If you place less than $250,000 in a savings, checking, money market, or other qualifying account or financial product with an FDIC-insured banking institution, you can rest assured that your money is safe.
That’s not the only safeguard you can rely on when working with a good bank, though.
For example, today’s most reliable banks:
- Implement robust risk management protocols: Your banking team works constantly to identify, assess, and mitigate potential risks to your bank’s safety. Your bank will also have established contingency plans to keep your information and assets safe if any identified risk becomes a reality.
- Continually ensure their compliance: Your banking team regularly checks its actions and offerings to ensure compliance with all applicable regulations and laws. This goes a long way toward ensuring your bank isn’t doing anything inherently risky with your deposits.
- Practice airtight fraud prevention: You’ve likely noticed that your bank has alarms and cameras to protect its physical location. It also has myriad systems running to detect and prevent digital threats, such as monitoring accounts for suspicious activity, verifying all transactions, and training staff to recognize fraudulent banking activity.
Your bank’s constant vigilance is one reason you can feel safe making deposits.
FDIC insurance is another big reason. But how is your money protected by the FDIC? If, despite your bank’s best efforts in risk mitigation, a rare event causes your bank to fail, the FDIC will step in.
This may lead you to another question: How secure is the FDIC?
Very secure, as it turns out. FDIC representatives have noted that no one’s ever lost a penny of insured deposits. Backed fully by the U.S. government, the FDIC can employ several different strategies to protect you and your deposit—including taking over a bank’s operations, selling its assets, or merging it with another bank.
What If My Deposits Exceed the Limits for FDIC Protection?
So far, we’ve just discussed the FDIC protections for deposits under the $250,000 threshold.
If you need to deposit sums over that limit—for example, if you’re a business owner or retiree managing more significant assets—you might wonder if you can benefit from FDIC insurance, too.
But don’t worry: you can.
Select banking institutions offer customers ways to deposit larger amounts of money while still enjoying full FDIC coverage. For example, at BNC National Bank, we offer the Certificate of Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) programs.
With these programs, you can spread your larger deposit across multiple banks that also offer CDARS or ICS. Each account is eligible for insurance up through the limit, and all your money gets covered.
If this sounds complicated, don’t worry! One of the benefits of these programs is that your bank takes care of the complex work behind the scenes. As a result, you get the insurance coverage, competitive interest rates, and peace of mind you seek—as well as the simplified experience of managing your money solely through your neighborhood community bank.
Want to Deposit Your Money with Confidence? We’re Here to Help
We know that when you’re depositing your money, you just want to know that your deposits are secure. At BNC National Bank, we have various processes to protect you, your information, and your assets—including FDIC coverage.
If you want to learn more about the convenience, flexibility, and competitive interest rates you can access through our banking services, schedule a meeting with our team. We can help you determine which type of account is best suited for you and your needs, from our savings accounts and CD options through CDARS and ICS accounts and more!
BNC National Bank, Member FDIC, Equal Housing Lender