Insurance for Your ??

The amazingly quick failure of Silicon Valley Bank over the past 7 days has sprouted endless questions: How did this happen? Why did the FDIC take over the bank on Friday? What does the FDIC do? This week, we’ll cover what the FDIC does and how you can optimize for FDIC insurance.?

• FDIC Coverage
• Maximizing FDIC Coverage & Risk
• $100 Bill Talks

Today's newsletter is 463 words, estimated reading time: 2.5 minutes.

FDIC Coverage

According to the FDIC website, “The FDIC, Federal Deposit Insurance Corporation, is an independent agency of the U.S. government that protects bank depositors against the loss of their insured deposits in the event that an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.”

What does this really mean??

• The FDIC is insurance for certain types of bank accounts to make sure you get your money in case of bank failure.?
• Deposit insurance is automated if the account is 1) at an FDIC insured bank AND 2) the type of account is FDIC insured.

Are there any limitations??

• The FDIC only covers up to $250,000 per depositor, per FDIC-insured bank, per ownership category.?
• Credit unions are not covered by the FDIC, but by the National Credit Union Administration. Deposits are covered up to $250,000 just like the FDIC.?

What types of accounts are FDIC insured?

• Checking accounts
• Negotiable Order of Withdrawal (NOW) accounts
• Savings accounts
• Money Market Deposit Accounts (MMDAs)
• Time deposits such as certificates of deposit (CDs)
• Cashier's checks, money orders, and other official items issued by a bank

Timing and takeaway: Bank failures are rare. The last bank failure was in 2008 during the Great Recession.? Weakened protections in the banking system increase risk for all.?

Maximizing FDIC Insurance

When it comes to money, there is always risk, including cash. Yep, cash can lose value due to inflation. Given the events of SVB and Signature Bank this past week, we’ve got a few tips to keep your money safe and reduce unnecessary risk.?

1. Don’t keep more than $250,000 in one FDIC insured account at an FDIC Bank. Got $300,000 in cash? Spread your money across account types and banks. Should anything happen, you’re fully covered by the FDIC insurance. No need to panic and race to the bank to see IF you can withdraw money.?

2. Read the FINE PRINT. The account AND bank BOTH need to be FDIC insured. An FDIC insurance bank, such as Chase, offers different types of banking and investing products.? However, not every type of account at Chase has FDIC insurance.? Read the FINE PRINT to ensure the account is FDIC insured.?

3. Need an FDIC-cousin for your investments? Use a SIPC brokerage firm.

SIPC, Securities Investor Protection Corporation, is very similar to the FDIC. However, the SIPC steps in when a brokerage firm fails vs. a bank. Learn more in 3 mins in this quick explainer.?

Bottom Line: Read all the fine print, terms, insurance, so you have a clear understanding of the risk you’re taking on.?

$100 Bill Talks

"An investment in knowledge pays the best interest." — Benjamin Franklin (Read the fine print?)

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