What Is FDIC?
FDIC stands for Federal Deposit Insurance Corporation. It is actually an independent body which was created by the Congress back then in order to insure the money saved by people. It is also a way of building confidence when it comes to banking and other financial transactions. However, it is important to know that not everything is insured under FDIC. More than that, even if there are amounts or transactions that are insured, there are certain limitations. Thus, it is a must for people to know what is covered and what is not.
To start with, FDIC covers traditional types of banking. This includes certificates of deposits, cheques, and savings. These accounts are actually insured for up to $250,000. This can also vary for special accounts or under ownership categories.
Now, there are also items that are not covered by FDIC. This includes different investment products that are not considered as deposits. Examples are annuities, mutual funds, bonds, as well as stocks and policies. These non- deposit investments cannot in any way be covered under FDIC.
For items that are covered by FDIC, how exactly does it work? Well, here is how it goes;
First of all, when your bank goes belly up in terms of losses, FDIC will be there to protect you. Despite the fact that banks can be very safe for keeping money and saving, there are instances when they also experiences problems. More than that, you have to realize that the money you have saved will also be used by the bank for other investment and in many different ways. Well, if these instances would arise, this is where the FDIC will come in the picture.
If your account is covered by the FDIC, you will not have any worries that you might lose it should the bank fail. In short, you need not to run after your bank. FDIC will be the one to deal with you and resolve your problems. However, as said earlier, there are certain limitations when it comes to the amount covered by the insurance.