While plenty of people have heard of the FDIC, there are a lot of people that don’t know what it actually is. FDIC stands for Federal Deposit Insurance Corporation. It’s a government-run organization that provides deposit insurance to the customers of US banks.
Why Was The FDIC Created?
After the Great Depression, a lot of people lost trust in American banks. The FDIC was created to restore the trust that was lost. Because of this organization, people knew that any money they deposited would be safe and secure.
How Does The Deposit Insurance The FDIC Provides Works?
If a bank is unable to give a customer their money, the FDIC can ensure that the customer receives the money that they are owed. That money comes from the Deposit Insurance Fund. The current balance is mandated to be 1.15% of the total insured deposits.
The FDIC is backed by the United States government. This means that both the deposit fund and government resources stand behind depositors. When you have insurance through the FDIC, your money is completely safe.
What Kinds Of Banks Can Receive FDIC Insurance?
Not every bank is eligible to receive FDIC insurance. Banks must classify as either well capitalized or adequately capitalized if they want to receive the benefits of this insurance. If a bank’s funds drop below a certain point, they will be place on a problem list. If a bank’s capitalization level reaches a critical point, the bank can be taken over by the FDIC.
If you’re going to be keeping your money in a bank, you will want to learn more about the FDIC and the insurance that it provides. After all, this deposit insurance is what will keep you safe if your bank becomes insolvent. The FDIC is great for banks and their customers. Check out their website.