Updated from July 6, 2020.
It’s important for you to understand how and where to safely keep your money. Thanks to the FDIC, American Riviera Bank is one of the safest places to store your hard-earned cash. The best part? All you have to do is open an account.
Having deposit insurance is one of the most significant benefits of having an account at a bank. While it isn't something you need to sign up for, it can be difficult to understand at first. Let's start with the basics.
The Federal Deposit Insurance Corporation (FDIC) was created in 1933 as an independent agency of the United States government. The FDIC protects depositors of insured banks against the loss of their deposits if an insured bank fails by insuring covered deposit accounts.
Simply put, the FDIC functions as safety nets for your deposits. Thanks to this protection, insured banks and the covered accounts within them are one of the safest places you can keep your money.
FDIC insurance covers deposit accounts, including checking accounts, saving accounts, money market deposit accounts, and certificates of deposit (CDs). FDIC insurance does not cover things like mutual funds, stocks, bonds, annuities, or crypto currency.
The standard insurance amount is $250,000 per depositor per insured bank, for each account ownership category. What does that mean? Let's break it down:
A depositor is a person or business who keeps money in a bank account. In the case of the FDIC, they will insure each depositor as long as the account is at an insured bank. How do you know if your bank is insured? You will see it posted throughout the bank, including anywhere you deposit funds or open an account. So, if you open a checking account at an FDIC-insured bank, your funds are insured up to $250,000.
This part gets a little trickier. The amount of FDIC insurance coverage you may be entitled to also depends on the ownership category of the account (the manner in which you hold your funds at the bank). Examples of ownership include individual accounts, joint accounts, trust accounts, business accounts, and government accounts. You can find a full list of ownership categories here.
The $250,000 insurance applies to each account ownership category, which means if you have an individual checking account and also have a joint account with your partner, you are entitled to up to $250,000 of insurance for the individual account and an additional $250,000 for the joint account. However, if you have two individual accounts, you are still only entitled to up to $250,000 because they are both in the same ownership category.
Things get even more interesting when you have a trust account because beneficiaries are also entitled to FDIC insurance.
The FDIC has a great insurance calculator you can use to calculate how much of your funds are covered. You can even print out the report when you are done!
If you have more than $250,000 that needs protecting, you will need to make some decisions about how much work you want to put into it. It is possible, through spreading your funds between a variety of ownership categories, to get significantly more than $250,000 covered, but the bookkeeping can be daunting. Another option is to keep money in a variety of FDIC-insured banks. This too will require additional bookkeeping and time since you will have to keep up multiple banking relationships and locations.
Another option is to use products like CDARS and ICS. The Certificate of Deposit Account Registry Service® (CDARS®) and the Insured Cash Sweep® (ICS®)1 are convenient ways to access FDIC insurance on multi-million-dollar deposits. As a member of IntraFi® Network DepositsSM, American Riviera Bank is able to provide customers with FDIC insurance up to $50 million. You will see all of your banking information in one consolidated statement and can work directly with the bankers you already know and trust.
There are lots of specifics when it comes to FDIC insurance. If you want to get more information about your situation and find out the best way to ensure that all of your money is protected, talk to your local banker or check out the website for the FDIC.
Visit our FDIC landing page here.
1. CDARS®, Certificate of Deposit Account Registry Service®, ICS® and the Insured Cash Sweep® are registered service marks of IntraFi® Network DepositsSM.Previous: Econ Forecast 2023