FDIC (Federal Deposit Insurance Corporation)

Before investing in a bank CD (certificate of deposit) the first priority you must have is to find out whether or not your investment is FDIC insured. Find the best FDIC insured CD rates BankVibe has to offer by searching through our archive (for local CD rates) or comparing the highest CD rates which are nationally available.

The Federal Insurance Corporation  is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank (this amount was raised from $100,000 per depositor per bank in October of 2008). Funds in non-interest bearing transaction accounts are fully insured, with no limit, under the temporary Transaction Account Guarantee Program. However, not all banks are participating in the TLGP/TAGP. (-wiki FDIC)

How do you know whether or not your deposit is FDIC insured?

When banks are approved, and become members of the FDIC, you will typically see the FDIC logo somewhere on the bank’s website or within the physical branch. If you do not see this logo you will want to speak to a representative directly to find out whether or not your money will be federally insured. The FDIC logo is on this page (upper left).

Other forms of bank deposit insurance

Non-FDIC member banks typically have deposit insurance from any number of private insurance corporations. While private deposit insurance can still help protect your money from a bank collapse it does not come backed with the full faith of the United States government as the FDIC does. If you are currently banking or considering banking with an institution which is not a member FDIC you will want to inquire as to what deposit limits are insured. You will also want to conduct a certain amount of research on the private deposit insurance corporation to see if they are a legitimate company.

Historical FDIC limits

  • 1935 – $5,000
  • 1950 – $10,000
  • 1966 – $15,000
  • 1969 – $20,000
  • 1974 – $40,000
  • 1980 – $100,000
  • 2008 – $250,000 (Temporary increase due to expire December 31, 2009)

The Banking Act of 1935 established the FDIC as a permanent agency of the government and provided for deposit insurance up to $5,000. The Federal Deposit Insurance Act of 1950 increased the insurance limit to $10,000, gave the FDIC the authority to lend to any insured bank in danger of closing if the operation of the bank is essential to the local community, and authorized the FDIC to examine national and state member banks for their insurance risk. (-wiki)

Generally FDIC insured deposit limits rise as the possibility of bank failures or economic downturns arise. Inversely, these limits may lower as favorable economic conditions return and bank solvency grows increases.

The FDIC deposit insurance limit was increased to $15,000 in 1966, and in 1969, to $20,000. In 1974, Congress increased the limit to $40,000.A deposit insurance limit of $100,000 was enacted in 1980 by the Depository Institutions Deregulation and Monetary Control Act of 1980. On October 3, 2008, the deposit insurance was temporarily raised to $250,000 per depositor through December 31, 2009. (-wiki)