Insured or Not Insured: A Question to Ask Before Placing Funds at a Bank
Banks have evolved in recent years into financial supermarkets offering a wide array of products beyond traditional checking and savings accounts insured by the FDIC. These additional choices include stocks, bonds, mutual funds, annuities, life insurance and other financial products that are not FDIC-insured deposits.
"While consumers can benefit from the convenience of going to one provider for many different services, they need to be aware — before they make a purchase — that some of the non-deposit products sold at their bank have a risk of loss," cautioned Martin Becker, an FDIC Senior Deposit Insurance Specialist.
Federal law is very specific about what is and is not FDIC-insured.
FDIC-insured accounts, including principal and accrued interest, are protected up to the federal limits (at least $250,000 per depositor per insured institution) if the bank fails. These primarily are checking accounts (including money market deposit accounts, which are not the same as money market mutual funds that invest in non-deposit investments and are not insured), negotiable order of withdrawal (NOW) accounts, savings accounts, certificates of deposit (CDs), and retirement accounts placed in deposits at insured institutions.
Products that are NOT FDIC-insured, even if purchased from a bank, include investments in mutual funds (stock, bond or money market mutual funds), annuities, stocks and municipal bonds, all of which are subject to investment risks, including the possible loss of principal. Treasury securities and Savings Bonds are not insured by the FDIC but are backed by the full faith and credit of the U.S. government. Contents of safe deposit boxes also are not protected by FDIC insurance.
To learn more about what is and isn't insured by the FDIC, visit www.fdic.gov/deposit/deposits or call us toll-free at 1-877-ASK-FDIC (1-877-275-3342).