June 9, 2023
Avidia Answers: What’s the deal with deposit insurance?
Welcome to the next installment of Avidia Answers, a new Advice feature that highlights common questions or concerns on the minds of the people we’re here for … our customers.
Today’s question … and it’s a two-parter (drumroll please) … What is FDIC insurance and does it protect my money with Avidia?
It’s an excellent and timely question, especially after recent news about the struggles of some financial institutions across the country. You can, however, rest assured that Avidia isn’t among them.
We continue to be a financially strong and growing independent financial institution that’s well-capitalized and committed to sound financial management. And, we also offer FDIC/DIF insurance, which means your deposits are fully protected.
Read on to learn more about that FDIC/DIF deposit protection:
What exactly is the FDIC?
The FDIC, an acronym which stands for the Federal Deposit Insurance Corporation, is an independent agency that was created to main stability in the country’s financial system and protect depositors. In addition to examining and supervising financial institutions, the FDIC provides deposit insurance for those who deposit money at FDIC-insured banks.
What types of deposits does FDIC insurance cover?
When you bank with an FDIC-insured financial institution, your deposits in the following types of accounts are protected:
- checking accounts
- savings accounts
- money market accounts
- certificates of deposit
FDIC insurance does not protect:
- treasury bills and other securities
- life insurance policies
- your piggy bank
What does it cost to have FDIC insurance protection?
Unlike with other types of insurance, you don’t have to pay premiums to have FDIC insurance. It’s automatically available to you when you bank at an FDIC-insured institution like say a bright orange one.
How much of your deposits are covered?
FDIC insurance is subject to coverage limits. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
What are ownership categories?
The FDIC provides separate coverage for different ownership categories, such as individual or joint accounts or accounts held in trust. Say, for example, you have an individual account with Avidia as well as a joint account with your partner or spouse. Because your accounts are in different ownership categories, each of those accounts would be covered up to $250,000 or for $250,000.
What if you have several accounts in the same ownership category?
That’s a little different. All of the deposits in the same ownership category at the same bank are added together and insured up to the standard insurance amount. So, if you had 3 individual accounts totaling $600,000 with the same bank, your deposits would only be protected up to $250,000 total with the FDIC.
How can you ensure full FDIC protection of your deposits?
Well, if you bank with Avidia, you’re in luck. In addition to offering FDIC insurance, we offer insurance from the Depositors Insurance Fund (known on the financial street as DIF insurance). DIF insurance is private, industry-sponsored insurance that insures ALL deposits above the FDIC coverage limits.
So, if you have $300,000 in deposits, you would have protection for the first $250,000 from the FDIC and $50,000 from the DIF. And as with FDIC insurance, there’s no cost to have DIF insurance.
How safe is FDIC/DIF insurance?
Well, no depositor has ever lost a penny with FDIC/DIF insurance. So, your deposits are in pretty good hands here at Avidia.
Need more answers?
Contact us and you shall receive more Avidia Answers.