What is the FDIC?

I was recently asked, “What is the FDIC?”

FDIC stands for Federal Deposit Insurance Corporation. According to the FDIC website (www.fdic.gov), it “is an independent agency created by the Congress that maintains the public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships.”

One way it maintains confidence is by insuring deposits in banks and thrift institutions. Currently, the limit is $250,000, so if you have $250,000 in a FDIC insured institution, the FDIC guarantees you’ll receive that money should that institution fail. The limit of $250,000 is a temporary limit that was set in response to the current financial crisis. Unless extended or made permanent by Congress, this limit will revert back to $100,000 after December 31, 2009.

To determine whether you institution is covered by FDIC insurance, see - www2.fdic.gov/idasp/main_bankfind.asp.

However, not all money you have with a FDIC covered institution may be covered by FDIC insurance. To help figure out whether your deposits are covered, see the “Are My Deposits Insured?” page at the FDIC site - www.fdic.gov/deposit/deposits/index.html.

There is also a government program that covers credit unions. The entity that provides the guidance and insurance is the National Credit Union Administration (NCUA). The NCUA operates a fund to insure “the savings of 80 million account holders in all federal credit unions and many state-chartered credit unions.”

So, check to see if your bank is FDIC insured or if your credit union is NCUA insured!