FDIC-Insured: What Does it Mean?
At Cheese, our debit card is FDIC insured. But, what exactly does that mean? What is the FDIC and why is it important when thinking about getting a savings-optimized debit or credit card?
How does FDIC insurance actually work? Well, it was established in 1933 as a way to promote consumer confidence in banks following the Great Depression. And, since then, they actually haven’t lost a single cent of anybody’s money.
So, it’s a pretty effective measure. And, it’s an important consideration when thinking about protecting the cash you save with whoever you decide to bank with, whether that’s through a checking account or savings account, or, in the case of Cheese, a debit card.
What is the FDIC?
The FDIC definition, or acronym, rather, is the Federal Deposit Insurance Corporation. It’s a government agency that insures your money to prevent any losses that might occur when you deposit it into an FDIC-insured account.
The concept came about after the Great Depression and was used as a way to bolster consumer confidence. After numerous banks failed, consumers weren’t too eager to go back and deposit their cash into bank accounts. So, they created FDIC insurance.
This meant that if in the future, a bank were to fail, the FDIC would step in and pay insurance to the depositors (up to a certain limit). Or, the FDIC would send out a check to each depositor for the insured balance of their account. Either way, consumers were able to enjoy a sense of security knowing that their cash would be protected.
What Is FDIC Insurance?
So, you now know that the definition of FDIC is the Federal Deposit Insurance Corporation. But, what about FDIC insurance itself? It’s insurance protecting you against the failure and closure of your bank. Here are some of the most common questions surrounding FDIC insurance:
- Do I have to apply for FDIC insurance? No. If you open an account at an FDIC-insured bank, your account will automatically be protected.
- Is every product covered by FDIC insurance? Not exactly. Not all financial products are FDIC-insured, which means it’s important to check before opening the account.
- Which financial products are FDIC-insured? The FDIC insures both checking and savings accounts plus money market deposit accounts and certificates of deposit.
- How can I find a bank that is FDIC-insured? The FDIC has a helpful tool that will allow you to search for a bank close to you that is FDIC-insured.
What About FDIC Insurance Limits?
It would be nearly impossible to ensure and secure every single dollar in every single account at FDIC-insured banks. That’s why there is an FDIC insurance limit. You’ll usually see that the FDIC states that “each depositor is insured to at least $250,000 per insured bank.” And, it’s important to understand that this FDIC insurance limit is accounting for your total deposits in accounts at one institution.
This means that if you have money in a savings account, but also in a checking account and perhaps a CD, you’ll want to make sure the combined total isn’t over $250,000. Experts often suggest spreading your money out across various different financial institutions if this is the case.
This changes if you’re married, where you each will be insured up to $250,000 at one financial institution. So, if you have a joint account with $500,000 in it, you’ll be covered. There are numerous different ways to get around the FDIC insurance limits, as long as you’re smart about how you move your money around and who you bank with.
How to Get Money from the FDIC?
Let’s say that the bank you’re a customer of goes under. It’s horrible, but luckily they’re FDIC-insured. Now, how do you go about getting your money? There are usually two main ways that this occurs:
- After the FDIC sells the deposits and loans to another financial institution, your account and funds will simply be transferred.
- If they can’t transfer the funds to another bank, the FDIC will issue you a check for the amount in your account(s).
You usually don’t have to do anything additional as the FDIC will handle all accounts and contact you in the case that they have questions or need to transmit information regarding your payout.
Sign Up for an FDIC-Insured Account
It’s rare nowadays that you hear about most larger financial institutions going under. However, recent economic events have shown us to expect the unexpected. If you’re looking to sign up for an FDIC-insured account, check out the Cheese Debit Card.
We pride ourselves on offering our customers only the best of the best, which is why we make it easy to sign up for the account and add on perks, such as $0 in monthly fees, $0 in overdraft fees, and chances to earn cash back without having to jump through hoops.
On top of it all, the card is FDIC-insured, allowing you to enjoy the peace of mind in knowing that your money is protected. Sign up today to join our waiting list to receive a Cheese Debit Card.