The recent closing of Silicon Valley Bank has many wondering if and how their money is protected. Fortunately, SVB was FDIC insured. But what does this mean for you? First, let’s discuss the FDIC.
What is the FDIC?
FDIC stands for the Federal Deposit Insurance Corporation. It is an independent U.S. government agency providing deposit insurance to protect depositors if an FDIC-insured bank or savings institution fails.
How does FDIC insurance work?
The FDIC monitors banks to ensure they are financially stable and operating efficiently. If not, like Silicon Valley Bank, they step in to protect depositors by paying insurance to cover their deposits up to the insured limit. Suppose your bank fails and your deposits are within the FDIC insurance limit. In that case, the FDIC will typically try to return your insured deposits to you within a few days by either transferring your deposits to another FDIC-insured institution or by issuing you a check for the insured amount.
Who/What is covered by FDIC insurance?
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. However, FDIC insurance does not cover all bank products. For example, the FDIC does not insure investments such as stocks, bonds, and mutual funds.
How can you protect yourself?
- Ensure your bank is FDIC-insured: You can confirm if it is FDIC-insured by looking for the FDIC logo on the bank’s website or in its branches. You can also visit the FDIC’s BankFind tool to verify your bank is FDIC-insured.
- Check the insurance limit: The standard insurance limit for FDIC-insured banks is $250,000 per depositor, per insured bank, for each account ownership category. You can use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to calculate your deposit insurance coverage based on your specific account ownership category and deposit balance.
- Keep your deposits within the insured limit: Make sure your deposits at any one bank are within the FDIC insurance limit. If you have more than $250,000 in deposits, consider spreading your deposits across multiple FDIC-insured banks to ensure all your deposits are fully covered.
