Federal Deposit Insurance Corporation (FDIC)
What Is the Federal Deposit Insurance Corporation (FDIC)?
The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency that protects bank depositors by insuring deposits held at participating banks. FDIC insurance helps safeguard customer funds if a bank fails.
The agency was established in 1933 following widespread bank failures during the Great Depression.
Why It Matters
FDIC insurance helps maintain confidence in the banking system. Depositors know their money is protected up to specific coverage limits if their bank becomes insolvent.
This protection reduces panic and prevents large-scale bank runs.
How the FDIC Works
FDIC insurance covers eligible deposit accounts including:
- checking accounts
- savings accounts
- money market deposit accounts
- certificates of deposit (CDs)
Coverage applies per depositor, per insured bank, within established limits.
If a bank fails, the FDIC helps return insured funds to depositors.
Example
If a bank insured by the FDIC closes due to financial failure, depositors typically regain access to insured funds within a short time.
FDIC vs SIPC
- FDIC protects bank deposit accounts.
- SIPC protects eligible securities held in brokerage accounts.
FAQs About the FDIC
What accounts are covered by FDIC insurance?
Checking, savings, and CDs are typically covered.
Does FDIC insurance cover investment losses?
No. It only protects deposits at insured banks.
How can consumers confirm FDIC coverage?
Banks display FDIC membership information at branches and on their websites.
Related Terms
- Bank
- Savings Account
- Certificate of Deposit (CD)
- Securities Investor Protection Corporation (SIPC)
- Financial Institution
- FDIC Insurance
