The FDIC (Federal Deposit Insurance Corporation) protects depositors by providing deposit insurance for money placed in insured banks. Specifically:
- It insures deposits up to at least $250,000 per depositor, per insured bank, for each account ownership category. This means if a bank fails, depositors are protected up to this limit and will not lose their insured funds
- FDIC insurance covers all types of deposit accounts at insured banks, including checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs). It does not cover investments such as stocks, bonds, mutual funds, or annuities
- The FDIC also supervises and examines banks to promote safety and soundness, and it manages the resolution of failed banks to maintain stability and public confidence in the banking system
- When a bank fails, the FDIC steps in to pay insured depositors promptly or arranges for another bank to assume the deposits, ensuring depositors have access to their insured funds without interruption
In summary, the FDIC protects depositors' money in insured banks against bank failure up to $250,000 per depositor, per bank, per ownership category, thereby promoting stability and confidence in the U.S. banking system
