Bank failures – recent ones The collapse of Silicon Valley BankAs scary as it may be, the chances of losing your savings overnight increase. Fortunately, thanks to the Federal Deposit Insurance Corporation, you probably don’t have to worry.

The entity, established by Congress in 1933 after a series of bank runs helped spark the Great Depression, is designed to protect the wealth of middle-class depositors. The idea is that, by assuring depositors that their money is safe, the government can prevent the kind of panic-driven run to withdrawals that could sink even otherwise healthy banks.

Although the FDIC officially only covers deposits up to $250,000, luckily there are easier (and perfectly legal) ways. Multiply that amountSo all your savings are FDIC-protected.

Results: If Silicon Valley Bank news—or Signature Bank, which recently ran into trouble—whether you’re wondering if you should take money out of your own bank, relax. The answer is almost certainly, “No.”

Read on to learn how the FDIC works and exactly what is covered.

What is FDIC Insurance?

The Federal Deposit Insurance Corporation is a federal regulator funded by deposit insurance premiums paid by member banks. The FDIC monitors the financial health of banks and ensures that they comply with consumer protection and credit laws. But its most touted function is exactly what it’s called – providing a backstop for depositors in the event of an emergency bank failure.

It offers deposit insurance to cover customers in full (up to a specified limit, usually $250,000) in the unlikely event of a bank failure. FDIC insurance coverage is automatic, as long as your money is held in an account at an FDIC-member bank — you don’t have to apply for it.

FDIC insurance coverage limits

If you have one to test, savings or other deposit accounts, the FDIC insurance limit is $250,000. For most bank customers, this is more than enough – but there are a few caveats around FDIC coverage that you should keep in mind.

Deposit coverage limit is per bank, per depositor and per “ownership category”. Ownership categories include sole proprietorship and joint accounts, various types of trust accounts, corporation and government accounts, and some benefit and retirement accounts.

All this means that it is possible for a single person to get coverage Well over $250,000. If you have $250,000 in two separate savings accounts at two different banks, the entire $500,000 should be fully covered. However, if you have $500,000 split between a checking account and a savings account at a bank, you can only cover up to $250,000.

One way to increase your coverage limit without dealing with multiple banks: If you have a savings account in your own name and share it with your spouse, your family will be covered up to $750,000. That’s because the FDIC treats joint accounts as separate “ownership categories” from single accounts and insures up to $250,000 per depositor. You can use the FDIC Electronic Deposit Insurance Estimator Online tool to plug in your specific situation and find out how much coverage you’ll have.

Another tip to make sure you’re covered: Look beyond your bank’s brand name, especially if you have a high-yield savings account or CD.

Many digital banks are actually brands of traditional banks. For example, BrioDirect is Webster Bank’s digital brand, and UFB Direct is a brand of Axos Bank. Although these digital banks carry FDIC insurance, if you have deposits in an account with both the online brand and the brick-and-mortar parent, they may be subject to the same $250,000 FDIC coverage limit.

If you’re not sure, you can check the name of the FDIC-member bank for your account using the FDIC Bankfind Tool.

If you choose to put money with a nonbank fintech company, you should do due diligence about FDIC insurance of your deposit. Although many of these neobanks partner with FDIC-member banks to provide deposit coverage, the FDIC says the conservators Make sure you understand the terms of your money insured, including how, when and where your money will be deposited with the firm’s FDIC-member bank partner to be alert.

What does FDIC insurance cover?

FDIC insurance covers what we think of as everyday bank accounts—specifically, checking and savings accounts, both interest-bearing and non-interest-bearing. FDIC insurance also covers other types of deposit products, including money market deposit accounts and CDs.

Deposit insurance does not cover stocks or bonds (including municipal bonds), mutual funds, life insurance, annuities or crypto assets, although your interests may be covered by a different type of insurance. FDIC insurance also does not cover US Treasuries, although the agency notes on its website that these instruments are backed by the US government, which is why they are considered safe investments around the world.

Here’s a rundown:

Are money market accounts FDIC insured?

FDIC coverage included Money Market Deposit AccountHowever, it does not cover money market mutual funds, which you buy through a broker

Are CDs FDIC insured?

Certificate of Deposit FDIC insured, subject to aggregate coverage limits. Exceptions to this rule Brokerage CD: These products are purchased through brokers, which puts them outside the scope of FDIC coverage.

Are credit unions FDIC insured?

Deposits held at FDIC insurance do not cover Credit UnionBut there is a parallel agency, the National Credit Union Administration, that offers equivalent deposit insurance with a $250,000 limit equal to the FDIC insured amount on accounts and certificates held by credit union members.

If you are comparing NCUA Vs. With the FDIC, you really won’t find any difference from a consumer perspective. As with FDIC insurance, you get automatic NCUA insurance coverage if you bank with a member institution.

Are brokerage accounts FDIC insured?

Investment products such as stocks, bonds (including municipal bonds) and mutual funds are not covered by FDIC insurance. If you have a brokerage account and it loses value, that’s a risk you have to be willing to expect as an investor.

The Securities Investor Protection CorporationAn independent organization for broker-dealers, offers coverage for lost cash and securities if you have Brokerage Account In a SIPC-member company that fails. Coverage limits are up to $500,000 per customer, per institution (even if that limit is multiple accounts with the same brokerage) with a maximum coverage of $250,000 in cash.

Are crypto exchange accounts FDIC insured?

Since the FDIC does not insure any non-bank assets, cryptocurrencies are not covered by the agency’s deposit insurance. It also does not protect consumers from losses that may result from fraud or theft.

The cryptocurrency market operates in a regulatory gray area, and consumers don’t have the same protections they would if they kept cash in a bank or credit union. Cryptocurrency exchanges, brokers, custodians and wallet providers all fall outside the umbrella of FDIC oversight and coverage.

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The advice, recommendations or rankings expressed in this article are those of the WSJ editorial team, and have not been reviewed or endorsed by our commercial partners.

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