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What is covered by FDIC Insurance

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What is covered by FDIC insurance?

Checking out CD rates, money market accounts, and savings accounts while deciding what bank to use is certainly helpful, but another consideration you should make before opening up an account with a bank or financial institution is whether or not they are FDIC insured.

FDIC insurance is coverage offered by the Federal Deposit Insurance Corporation to reimburse you in the event that your bank or financial institution becomes insolvent. Before you open any account, be sure the institution you are considering is FDIC insured.

While your IRA account may be covered, it is important to remember that FDIC insurance does not cover for investment loss or poor investment decisions. If you were to invest your IRA funds into mutual funds or stocks that lose money, FDIC insurance would not reimburse you.

Not all accounts within a financial institution are allowed FDIC. Bank accounts like checking accounts, savings accounts, money market accounts, IRAs, trust accounts, and CDs are. The limits to the amount your accounts are insured vary but do not exceed $250,000 per person, per bank.

Since the FDIC is meant to make you whole after bank failure or insolvency, the amount of your insurance benefit would never exceed the amount of your balance.

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