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FDIC Insurance FAQs

April 4, 2023

With the recent news of bank failures in California and New York, FDIC insurance coverage may be top of mind for you.  FDIC insurance can be difficult to understand and navigate so we have compiled a few Frequently Asked Questions to help as a resource.  Rivers Edge Bank takes pride in being an FDIC-insured bank which offers depositors the peace of mind that their deposits are safe and secure.  

What is the FDIC and what type of insurance do they provide?  

The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that provides insurance to depositors in case their bank fails or becomes insolvent. 

How much coverage does the FDIC insurance provide?  

The FDIC insurance covers deposits up to what they call the Standard Maximum Deposit Insurance Amount (SMDIA), which is currently set at $250,000. 

Is the deposit limit considered per depositor or per account at the bank?   

The answer to this question can be a bit tricky.  One key factor to note when considering FDIC insurance coverage is ownership category of the deposits held at a financial institution.  The SMDIA limit is applied per ownership category per depositor per insured bank.  This means that a depositor could potentially be insured for more than $250,000 in total if they have multiple accounts at the same bank in different ownership categories.  All deposits held under the same ownership category (even if the deposits are in different account types) are added together and insured up to the $250,000 limit per depositor.  

What are the ownership categories the FDIC considers?    

When it comes to different ownership categories, there are several scenarios to consider:

Single Ownership Category: In this scenario, all deposits at a bank are owned by a single depositor. FDIC insurance covers up to $250,000 for that depositor's deposits.

Joint Ownership Category: When two or more people own deposits jointly, each owner is insured up to the $250,000 limit.  For example, if a husband and wife have a joint account with a balance of $500,000, each person would be insured up to $250,000.

Trust Ownership Category: Deposits held in trust accounts are insured separately from deposits held in personal accounts. The FDIC insures up to $250,000 per beneficiary for each qualifying account, up to a maximum of 5 beneficiaries. For example, if a trust has three beneficiaries and a total balance of $750,000, each beneficiary would be insured up to $250,000.  Irrevocable trust accounts do have some different stipulations.  For more information about those, please contact us or visit the FDIC website here:  https://www.fdic.gov/resources/deposit-insurance/financial-products-insured/

Business Ownership Category: Deposits held in business accounts are insured separately from deposits held in personal accounts. Each business is insured up to $250,000 per depositor, just like personal accounts. 

How can I calculate the amount of FDIC insurance I qualify for at the bank?  

The FDIC provides a helpful tool called the Electronic Deposit Insurance Estimator (EDIE) on their website that allows depositors to calculate their FDIC insurance coverage for different account ownership categories. It is important for depositors to be aware of the limits and to use tools like EDIE to know if their deposits are fully insured.  If you would like assistance with calculating your level of FDIC insurance, we would love to help!  Feel free to contact us and we can work together on the calculations.  

Here is a link to the EDIE calculator on the FDIC website:  https://edie.fdic.gov/calculator.html 

How can I find out more about FDIC insurance coverage?  

For more information, please visit the FDIC website.  It will provide more details and should answer most questions you may have about FDIC insurance.  

https://www.fdic.gov/resources/deposit-insurance/financial-products-insured/


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