Each depositor insured to at least $250,000 per insured bank

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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Summer 2006 – Start Smart: Money Management for Teens

What Do Banks Do?

Banks are private, for-profit businesses that offer a variety of services to the public. They provide a place to safely store your money in FDIC-insured checking and savings accounts until you need to take the money out. Banks enable customers to write checks, pay bills or send money to other people. They also make loans to people and businesses.

Lending money is one of the ways that a bank earns money. And where does the bank get the money to make loans? Mostly, it uses the money that customers have deposited into checking and savings accounts, while ensuring that those depositors can still get their money back when they want it.

"Savings banks" or "savings and loan associations" (also known as "thrift" institutions) are also FDIC insured; their main business usually involves making home loans. To keep things simple, we've used the word "bank" in this guide to refer to all of the various types of FDIC-insured banking institutions.

Most but not all banks and thrifts in the U.S. are insured by the FDIC. One way to check whether an institution is FDIC-insured is to call the FDIC toll-free at 1-877-275-3342.

In addition, you may have heard about credit unions. These are not-for-profit financial institutions that are owned and operated by their members, who are usually people who have something in common, such as the same employer or occupation. You have to become a member of the credit union to keep your money there. Deposits at credit unions are insured by another federal government agency called the National Credit Union Administration.

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Last Updated 08/18/2006