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Ask the expert: Determining FDIC insurance coverage
Q: I'm in the process of choosing a bank. How can I make sure my money will be insured at the bank I choose?
A: Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC). However, just because you have money on deposit at a bank doesn't necessarily mean that money is covered by FDIC insurance. There are a few things that determine eligibility for FDIC insurance:
- Participation of your bank. Thousands of banks participate in the FDIC insurance program. You should look for the FDIC symbol on correspondence and other materials from any bank you are considering using, but to make completely sure, visit the FDIC web site. They have a tool which allows you to search for a particular bank to confirm that it is covered.
- Type of account. Even if you bank with an FDIC-participating institution, not all types of accounts at that bank are necessarily covered by FDIC insurance. Deposit accounts, such as savings accounts, money market accounts, and certificates of deposit (CDs) are covered. Investment products, such as mutual funds, are not covered by FDIC insurance.
- Amount of your deposits. Once you've identified an FDIC-participating institution and opened a deposit account that is eligible for FDIC insurance, there is one more thing that will determine whether or not all your money in that account is insured. FDIC insurance is limited to $250,000 per depositor, per institution. This means that even if you split your money at a bank into separate accounts, any combined amount over $250,000 won't be covered. However, if you have an IRA and an ordinary taxable account, those are considered as having different ownership categories and are thus eligible for $250,000 in insurance each.
FDIC insurance is a wonderful tool for keeping your money safe. All you have to do is make sure you fall within the parameters of this protection, and you can rest easy.
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