What is the FDIC: Your Complete Guide| North Loop Official Blog
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12 Jan 2020

What is the FDIC: Your Complete Guide

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Everything you need to know about the FDIC

If you have a bank account in the United States, you will see notices that your account is insured up to $250,000 by the FDIC. But what exactly does that mean?
In this article, we look at what is the FDIC and what does it mean for you?

What is the FDIC?

The FDIC stands for the Federal Deposit Insurance Corporation. Created by the 1933 Banking Act, the FDIC was created to restore public faith and trust in the American banking system after the Great Depression, when many banks were failing. The FDIC is a federal government corporation that insures accounts up to $250,000 for account holders at its members (over 5,000 financial institutions at the moment)?
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History of the FDIC

During the Great Depression, there was widespread distrust in banks’ abilities to stay afloat - over one-third of banks went under due to bank runs. A bank run is when a sudden demand by depositors to withdraw their cash exceeds the cash the bank has at the moment. So in 1933, the Banking Act was implemented, which created the FDIC and insured deposits up to $2,500 per account (approximately 47,000 today). Over the years, the limit was increased. In 2008, during the midst of the financial crisis, the amount was increased to $250,000 per account.
The impact of the FDIC was tremendous - it restored faith in the US banking sector, and the number of banks that closed due to bank runs decreased dramatically.

What does FDIC Insurance mean for you?

So what does it mean to have FDIC insurance? Simply, if your bank (the institution holding your deposits) fails or shuts down, your money is safe - up to $250,000 is guaranteed by the FDIC.
Accounts that are insured include:
  • Demand deposits (also known as checking accounts)
  • Savings accounts
  • Foreign currency accounts
  • Cashier’s checks

You don’t have to apply for FDIC insurance - your bank will provide it if it’s a member of the FDIC. In the unlikely event of your bank failing, the FDIC will (the next business day) move your funds into a new bank account or issue you a check for the amount that was in your account. This way you’re insured and don’t have to worry about your money.

What does FDIC Insurance not cover

Stocks, bonds and mutual funds are covered by the Securities Investor Protection Corporation (though that insures you against the brokerage failing, not your losses on investments). Other securities products and investment products are also not covered.

North Loop FDIC Insurance

All North Loop Checking Accounts are FDIC-insured through Evolve Bank & Trust, Member FDIC. That means up to $250,000 in your account is safe and secure, so you can rest at night knowing your money is also resting safely.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.