Why do so many people trust banks to hold onto their money safely? Today, most banking customers understand that their money is fully protected in the event of a bank failure, but this was not always the case. Fortunately, the vast majority of banks, both online and brick-and-mortar institutions, carry FDIC insurance that protects all of their depositing customers.
What is FDIC Insurance?
FDIC stands for Federal Deposit Insurance Corporation. It is an independent group that was established by the United States Congress in 1933 to instill confidence in the stability of the banks across the nation. Insurance provided by the FDIC has the backing of the United States government. It provides up to $250,000 per banking depositor in the event the bank fails.
When and Why Did FDIC insurance Begin?
In 1933, many financial institutions had to close their doors, and customers lost their money. Because of this financial failure, the FDIC came into existence. Its primary purpose is to encourage banking stability and consumer confidence in the banks. FDIC Insurance is the protection provided by this organization to safeguard monetary deposits for bank customers in the event another banking collapse occurs.
What Institutions Carry FDIC Insurance?
The vast majority of both online and brick-and-mortar banks carry FDIC insurance. Banks that carry this type of protection advertise it.
Do You Need to Sign up for FDIC Insurance?
This type of coverage is automatically provided when you open a bank account through a financial institution that offers it. You do not need to sign up to receive it, nor do you need to sign any documents.
FDIC insurance is a safeguard for anyone using a bank to deposit monetary funds. It insures each customer up to the full amount of $250,000. If you do not see advertisement that the bank is FDIC protected, you should ask. It is one of the signs that the bank you are using is legitimate. Best of all, this type of insurance coverage is free.