Extra Credit (Fall 2008)

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  Frequently Asked Questions

Q: What is the FDIC? How long has it been around?

The Federal Deposit Insurance Corporation (FDIC) is an agency of the U.S. government established in 1933 in response to rampant bank failures during the 1920s and early 1930s. The Banking Act of 1933 created the FDIC, which, in the event of a bank failure, insures the money (up to certain amounts) people have on deposit in banks. According to the FDIC, no depositor has ever lost a penny of FDIC-insured funds.

Q: What types of accounts are FDIC-insured? How much am I insured for?

All federally chartered banks and almost all state-chartered banks in the United States are insured by the FDIC. The FDIC insures depository accounts, such as savings accounts, checking accounts, or certificates of deposits. The FDIC does not insure investment accounts, such as stock or bond portfolios.

In October 2008, Congress temporarily increased (through December 31, 2009) the FDIC insurance limit on many types of accounts. All non-interest bearing transaction deposit accounts, such as many personal and business checking accounts, will be fully insured for the entire amount on deposit. For interest-bearing single and joint accounts, such as savings accounts and interest-bearing checking accounts, the limit was raised from $100,000 to $250,000 per depositor, per insured bank. Insurance limits for some other types of interest-bearing accounts, such as individual retirements accounts (IRAs) and trust accounts, remain at $250,000. Deposit insurance coverage at any one bank may extend beyond the normal $250,000 limit in certain circumstances based on account ownership. For more information, visit www.fdic.gov/deposit/index.html.