How does fdic insurance coverage work

That means backing by the Federal Deposit Insurance Corp. Credit unions offer this security as well, through the National Credit Union Administration. In , eight banks failed, but during the Great Recession, dozens went under.

Still, since the creation of the FDIC, not one cent of insured deposits has been lost. Banks are not insured by default; like most forms of insurance, it comes at a cost. The bank pays the premiums.

FDIC insurance covers deposit accounts — checking , savings and money market accounts and certificates of deposit — and kicks in only in the event a bank fails. Losses incurred from investments are not covered, even if they were purchased from an insured bank.

FDIC insurance also does not cover contents of a safe deposit box housed at a bank. One way to make sure all of your money is insured is to spread it across multiple institutions. All of your money is protected in this scenario. Other kinds of ownership categories include certain retirement accounts, such as IRAs, trust accounts and employee benefit plan accounts.

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You may get non-covered products through a bank or financial institution that advertises some of its products as FDIC-insured. There are two basic ways to maximize your FDIC insurance.

The first is to open accounts at different banks. The FDIC will insure both of these accounts. The other way to maximize FDIC insurance is to have accounts at the same bank in different ownership categories.