In this month's blog, I want to introduce you to the FDIC and its importance for you as a consumer. You've probably seen the initials FDIC at your local financial institutions and on your bank statements. But what does it mean and what is its purpose?
THE FDIC (Federal Deposit Insurance Corporation)
The FDIC is an independent agency of the U.S. government that protects a depositor against the loss of insured deposits if an FDIC-insured bank or savings association fails.
FDIC insurance covers all types of deposits in an insured bank, including checking accounts, NOW (Negotiable Order of Withdrawal) accounts, savings, Money Market Deposit Account (MMDA), Certificate of Deposit (CD) aka Time Deposit and other official items issued by a bank (e.g) bank check (Cashier’s check) or money orders.
FDIC insurance covers depositor’s accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the bank’s failure, up to the insurance limit, currently $250,000 per person, per bank, per ownership category. Money not insured by FDIC are non-deposit investment products like stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, U.S. Treasury securities and other government securities even if these investments are purchased at an insured bank.
These non-deposit investment products may be offered to you at your bank, through the mail, over the phone or the internet and often, the people selling these products are not financial institution employees but employees of a third-party securities broker/dealers or insurance companies. When speaking with a sales representative about non-deposit investment products, you should be informed that the product is NOT insured by the FDIC and subject to investment risk.
To verify whether a bank is FDIC-insured, ask a bank representative, look for the FDIC sign at your bank, call the FDIC at 877-275-3342 or use the FDIC’s BankFind tool.
BankFind allows you to access detailed information about all FDIC-insured institutions, including branch locations, the bank’s official website, current operating status of the bank and the regulator to contact for additional information and help. You can get detailed information about your specific deposit insurance coverage by accessing the FDIC’s Electronic Deposit Insurance Estimator (EDIE) and entering information about your accounts. By calling the FDIC at 877-ASK-FDIC (877-275-3342) to speak with an FDIC deposit insurance specialist, you can get additional information about your FDIC- insured deposit accounts.
OTHER ITEMS NOT INSURED BY THE FDIC:
Safe Deposit Boxes: The contents of a safe deposit box are NOT insured by the FDIC. If you are concerned about the safety of items in your safe deposit box, consider purchasing fire and theft insurance which is usually part of a homeowner’s or tenant’s insurance policy. Consult your insurance agent for details.
Robberies and other Thefts: Stolen funds may be covered by the bank’s blanket bond, which is a multi-purpose insurance policy banks purchase to protect themselves from fire, flood, earthquake, robbery, defalcation, embezzlement and other cases of lost funds. However, unauthorized access to your deposits may be covered by the Electronic Funds Transfer Act and other customer protections.
HOW TO FILE A COMPLAINT:
Should you have a problem or concern with a deposit or investment, seek resolution directly with a bank officer or firm before involving an outside agency. Financial institutions value their customers and will try very hard to be helpful, however, if you’re unable to resolve the issue with the bank or firm, use these guidelines to direct your complaint to the right agency.
For questions, call the FDIC Central Call Center at 877-275-3342. For the hearing impaired, call 800-925-4618 or 703-562-2289.
Denise Garrett is a financial counselor at the LDCENY and has more than 25 years experience in financial counseling and retail banking.