FDIC 2023: Facts About Insurance For Businesses
What is the FDIC? What does it have to do with me? Is my money protected?
Events in the spring of 2023 with the FDIC and Silicon Bank have raised a lot of questions from business owners concerned with whether their money is safe in the bank they’re using. The FDIC is an agency with protections in place for this exact reason, but information isn’t exactly clear about how it works, and it is important for you to know whether your money is safe and the rules for how you can be protected. Money Mastery is here to help break down what matters.
What is the FDIC?
The FDIC, or Federal Deposit Insurance Corporation, is an agency that provides banking insurance backed by the United States government. Its purpose is to ensure depositors, including businesses, do not lose money in the event that their bank fails, but it does not apply to all banks, accounts, and amounts.
How will I know if my bank is covered?
Many banks are covered, but that isn’t an assumption you want to make. Only banks which are insured by the FDIC will receive coverage benefits, and to be an insured bank, they need to meet certain standards for capital, liquidity, and reporting. So how do you know if the funds for your business are safe?
- FDIC insured banks are required to display the FDIC logo in the main area where deposits are made, so you could look out for that signage the next time you visit the local branch.
- The FDIC website has a handy tool called BankFind, which is a searchable database of all their covered institutions.
What accounts and investments are covered by the FDIC in 2023?
Check out the image below for a comparison of coverages.
How much money will FDIC insurance return?
Protections are not unlimited. Accounts are only insured up to $250,000. Anything over this amount is at risk if your bank were to abruptly close. You may, however, divide your funds into multiple accounts, which multiplies the amount of coverage. If you have three checking accounts, for example, each account is insured for the amount it contains up to $250,000, making your total insured amount up to $750,000. There are some exceptions to this rule, and it is important to speak with a business consultant and accountant like Money Mastery to make sure you are not gambling with your business funds.
How do I activate FDIC insurance for my business?
No steps are required at all. If you bank with an insured institution, your money is automatically protected up to that $250,000 amount. In the unfortunate event of a bank failure, your funds would either be made available through another bank or sent directly to the account holder in a matter of days.
What other questions do you have for us at Money Mastery? This isn’t an issue you want to leave to fate. Contact us with your specific concerns and inquiries. As business consulting and accounting experts, we will do everything we can to help.